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UNIVERSITY  OF  CALIFORNIA 
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NATIONAL    BANK 
ORGANIZATION 


NATIONAL    BANK 
ORGANIZATION 


1812  —  1904 


THE   NATIONAL   CITY    BANK 

OF   NEW   YORK 

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CoPYRIGHTj      1904,     BY 

The   National   City  Bank   of   New   York 


From  the  Press  of 

Robert  Grier  Cooke 

307  Fifth  Avenue 

New  York 


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PREFACE 

A  GREAT    stimulus    was    given    to    the 
national  banking  system  by  the  legisla- 
tion  of  March    14,    1900.      That   Act 
provided  for  the  refunding  of  the  national  debt, 
the   issue   of  the    two   per    cent.   Consols,    the 
organization  of  banks  with  a  minimum  capital  of 
$25,000,  and  contained  features  making  the  issue 
of  circulating   notes   more  profitable.      A  new 
national  bank  has  been  organized  on  an  average 
J  every  day  since  that  legislation  was  passed.     We 
J  have  at  this  time  5,180  national  banks,  with  the 
\*  organization  of  new  institutions  going  on  at  as 
rapid  a  rate  as  at  any  time  in  recent  years. 

The  many  technical  questions  that  arise  in  the 
organization  of  new  national  banks  or  in  the  con- 
version of  private  or  State  banks  into  national 
institutions,  and  the  fact  that  tliere  has  not  here- 
tofore been  collected,  in  a  form  readily  accessible, 
the   information    wliicli   the    organizers    of  new 


383082 


Preface 

banks  desire  in  regard  to  legal  requirements, 
Government  regulations  and  Treasury  practice, 
have  led  to  the  preparation  of  this  volume.  It 
has  been  the  endeavor  to  collect  here  in  concise 
form,  with  as  few  legal  technicalities  as  possible, 
all  the  information  which  the  organizers  of  a 
national  bank  may  need,  from  the  tirst  steps  in 
the  agreement  to  organize  up  to  the  issuing  of 
the  bank's  charter.  There  is  also  given  complete 
information,  covering  all  the  points  with  which  it 
is  necessary  for  bank  officers  to  be  familiar,  in 
regard  to  the  issue  of  Circulating  Notes,  Govern- 
ment Depositaries,  Bank  Reserves,  and,  in  fact, 
all  those  relations  between  the  bank  and  the 
Treasury  Department  that  arise  in  the  operation 
of  a  national  association. 

This  volume  is  intended  to  supplement  a  vol- 
ume on  Government  bonds  already  issued.  It  is 
believed  that  the  information  contained  in  the 
two  works  will  present,  in  a  form  convenient  for 
reference  and  readily  understood,  answers  to  all 
the  questions  which  are  likely  to  arise  in  the 
organization  and  operation  of  a  national  bank  in 
connection  with  its  relations  to  the  Government. 
This  volume  has  been  carefully  read  in  the  office 
of  the   Comptroller   of  tlie    Currency  and  the 


VI 


Preface 

statements  of  fact  may  be  relied  upon  as  authori- 
tative. 

Should  the  organizers  of  national  banks  desire 
further  information  on  any  specific  points,  the 
National  City  Bank  will  answer  promptly  any 
inquiries  addressed  to  it. 


Vll 


CONTENTS 

r 


Page 

Detailed  Steps  in  Organization 1 

Conversion  of  State  Banks 16 

Conversion  of  Private  Banks 19 

Consolidation 21 

National  Bank  Note  Circulation 24 

Profits  on  Circulation 46 

Bank  Reserves 52 

Government  Depositaries 62 

Profits  on  Deposits   ' 74 

Official  Reports 81 

Notice  of  Shareholders'  Meetings 86 

Extension  of  Corporate  Existence 88 

Re-extension  of  Corporate  Existence 94 

Changes  in  Capital  Stock       96 

Change  of  Name  or  of  Location 100 

Liquidation 103 

Restrictions 107 

New  York  Correspondent 116 

Official  Documents  and  Forms 135 

ix 


DETAILED    STEPS    IN 
ORGANIZATION 

r 

THE  first  official  step  in  the  organization 
of  a  national  bank  should  be  an  applica- 
tion to  the  Comptroller  of  the  Currency 
at  Washington,  D.  C,  in  the  form  given  on  page 
135.  This  application  must  be  signed  by  at 
least  five  persons  who  expect  to  become  stock- 
holders. The  application  may  bear  the  signatures 
of  more  than  five  persons,  if  desired,  but  that 
number  is  sufficient.  The  signers  must  be  natu- 
ral persons — that  is,  individuals  legally  entitled 
to  hold  and  control  property  in  their  individual 
right.  No  corporation,  firm,  or  association  of  any 
character  may  be  a  party  to  the  organization  of 
a  national  bank. 

This  application  to  the  Comptroller  should  set 
forth  the  financial  standing  and  occupation  ot 
the  applicants.  It  should  bear  the  endorsement 
of  a  United  States  Senator,  Representative, 
Judge  of  Court,  or  some  other  prominent  public 
official.     It   should  give  the  exact  title   under 

1 


Executing  Organization  Blanks 

which  it  is  desired  to  organize,  the  proposed  lo- 
cation, and  the  amount  of  the  proposed  capital. 

The  office  of  the  Comptroller  of  the  Currency 
very  properly  insists  that  all  papers  in  connec- 
tion with  the  organization  of  a  national  bank  be 
in  the  exact  form  provided  for  by  its  regulations. 
The  organizers  of  a  national  bank  will,  therefore, 
avoid  delay  in  securing  the  approval  of  their 
application  by  the  Comptroller  of  the  Currency 
if  they  will  take  great  care  to  make  all  papers 
accurately  conform  to  the  regulations  of  the 
Comptroller's  office. 

Especial  care  should  be  taken  to  state  in  the 
application  to  the  Comptroller  the  exact  title  of 
the  bank.  This  title  should  include  the  name  of 
the  city  in  which  the  bank  is  to  be  located,  but 
not  the  name  of  the  State. 

It  should  be  noted  in  this  connection  that  the 
Comptroller's  office  will  not  give  consideration 
to  an  application  for  a  title  including  the  word 
"  First  "  if  a  national  bank  exists  or  has  existed 
in  the  place  given  as  the  proposed  location  of  the 
new  bank.  Neither  will  the  Comptroller's  office 
give  consideration  to  an  application  for  any  title 
identical  with  that  of  a  national  bank  which  has 
previously  been  in  existence  in  the  same  place, 

2 


Required  Capital 


nor  to  one  materially  similar  to  that  of  a  na- 
tional, State  or  other  bank  existing  in  the  place. 
The  capital  necessary  for  the  organization  of  a 
national  bank  is  as  follows : 

In  towns  with  population  of  Minimum  capital. 

Not  more  than      3,000 $25,000 

"  "        6,000 50,000 

"  "      50,000 100,000 

Over  50,000 200,000 

If  the  application  submitted  is  approved  by 
the  Comptroller,  he  will  so  notify  the  applicants, 
and  the  title  applied  for  will  be  reserved  for  a 
period  of  sixty  days,  during  which  time  the  bank 
is  expected  to  complete  its  organization.  In  ap- 
proving the  application  for  organizing  a  national 
bank,  the  Comptroller  will  send  to  the  appli- 
cants all  necessary  blanks  for  completing  its  or- 
ganization. 

Atler  the  approval  of  their  application  by  the 
Comptroller,  those  interested  in  organizing  the 
bank  should  execute  Articles  of  Association. 
There  have  been  drafted  by  competent  legal 
authority  typical  Articles  of  Association,  which 
are  given  on  page  136.  This  form  may  be 
varied  to  cover  any  special  provision,  not  incon- 

3 


Organization  Certificate 


sistent  with  the  National  Bank  Act,  which  the 
organizers  may  wish  to  adopt.  If,  however,  the 
form  suggested  is  adopted,  it  will  be  found  sat- 
isfactory to  the  office  of  the  Comptroller  of  the 
Currency,  and  will  meet  all  the  ordinary  require- 
ments of  the  bank. 

The  Articles  of  Association  must  be  signed 
by  not  less  than  five  of  the  persons  presenting 
the  original  application.  The  Articles  of  As- 
sociation must  be  executed  in  duplicate,  one 
copy  to  be  filed  with  the  Comptroller  of  the 
Currency,  and  one  to  be  kept  by  the  bank. 

At  the  time  of,  or  after,  the  execution  of  the 
Articles  of  Association,  the  organizers  must  ex- 
ecute an  Organization  Certificate.  The  form 
for  this  will  be  found  on  page  140. 

The  Organization  Certificate  must  be  executed 
by  the  same  persons  who  signed  the  Articles  of 
Association.  This  certificate  must  be  executed 
in  duphcate,  one  copy  to  be  filed  with  the  Comp- 
troller of  the  Currency,  and  one  to  be  kept  by 
the  bank.  Each  shareholder  signing  the  Organ- 
ization Certificate  must  acknowledge  his  signa- 
ture before  a  Judge  of  a  Court  of  Record  or  be- 
fore a  Notary  Public  possessing  a  seal. 

When  the  organization  of  the  bank  is  effected 

4 


Election  of  JDirectors 


and  certificates  for  the  capital  stock  are  issued, 
care  should  be  taken  to  issue  these  certificates 
for  the  amount  and  in  the  names  listed  on  page 
2  of  the  Organization  Certificate. 

A  typical  form  for  the  stock  certificate  will 
be  found  on  page  142. 

If  Section  3  of  the  Articles  of  Association 
does  not  name  the  stockholders  who  are  to  serve 
as  directors  of  the  bank,  provision  should  be 
made  for  the  election  of  such  directors  after 
the  Organization  Certificate  has  been  executed. 
This  election  of  directors  may  take  place  at  a 
meeting  held  any  time  before  the  issuance  of  the 
Comptroller's  certificate  authorizing  the  com- 
mencement of  business. 

After  the  directors  of  the  bank  have  been 
named  by  tlie  stockholders  (either  by  election  or 
by  appointment),  they  should  take  an  oath  of 
office.  If  the  directors  are  all  residents  of  the 
place  in  which  the  bank  is  to  be  located,  they 
may  take  the  oath  jointly,  in  the  form  given  on 
page  142.  If  it  is  not  convenient  for  the  direc- 
tors to  make  oath  upon  one  document,  eacli 
director  may  execute  for  himself  an  oath  of 
director  as  given  on  page  143.  Tiiese  oatlis  of 
directors  must  be  acknowledged  before  a  Notary 

5 


Election  of  Officers 


Public  and  must  bear  the  Notary's  seal.  If  the 
Notary  has  no  seal,  a  certificate  of  the  proper 
State,  County,  or  Court  Official  to  the  effect 
that  he  is  authorized  to  take  acknowledgments 
should  be  attached  to  the  oath  of  directors. 

Information  regarding  Qualifications  of  Direc- 
tors, Voting  by  Proxy,  and  Cumulativ  e  Voting 
is  given  on  page  12. 

As  soon  as  practicable  after  the  Directors 
have  been  named,  they  should  proceed  to  the 
election  of  a  President,  Vice-President,  Cashier, 
and  such  other  officers  as  may  be  determined 
upon,  define  their  duties,  and  make  such  pro- 
vision for  the  conduct  of  their  work  as  may  be 
necessary. 

This  should  be  done  in  the  form  of  By-Laws 
which  should  be  regularly  adopted  by  the  Board 
of  Directors.  A  typical  form  for  such  By-Laws 
is  suggested  on  page  144.  There  may  be  modi- 
fications from  that  form  to  meet  the  views  of  the 
organizers,  but  if  that  form  is  followed,  it  will 
meet  with  the  approval  of  the  Comptroller  with- 
out question. 

The  officers  elected  should  send  to  the  Comp- 
toUer  of  the  Currency  their  signatures  under 
seal  of  the  bank  in  the  form  given  on  page  151. 

6 


Stock  Subscriptions 


After  the  election  of  officers,  the  directors 
should  call  in  the  subscriptions  to  the  capital 
stock.  One-half  of  the  total  amount  of  the  pro- 
posed capital  stock  of  the  bank  must  be  paid  in 
before  the  Comptroller  will  issue  a  certificate 
authorizing  the  bank  to  commence  business. 
The  capital  must  be  paid  in  cash.  Promissory 
notes  or  other  evidences  of  debt  may  not  be 
received  for  that  purpose. 

As  soon  as  the  required  amount  is  paid  in,  a 
Certificate  of  Payment,  signed  and  sworn  to  by 
the  President  or  Cashier,  should  be  executed  in 
duplicate,  one  copy  to  be  sent  to  the  Comptroller 
of  the  Currency  and  one  to  be  retained  by  the 
bank.  This  certificate  should  be  substantially 
in  the  form  given  on  page  152. 

The  law  provides  that  the  payment  of  the  re- 
maining 50  per  cent,  of  the  capital  stock  may  be 
made  in  not  more  than  five  instalments  of  10  per 
cent,  each,  one  at  the  end  of  each  30  days  suc- 
ceeding the  issuance  of  the  Comptroller's  certifi- 
cate of  authority  to  commence  business.  If  the 
organizers  of  the  bank  desire  to  provide  for  the 
payment  of  the  remainder  of  the  capital  stock 
in  instalments  of  more  than  10  per  cent,  each, 
they  may  do  so.     All  of  the  capital  stock  may, 


Charter  Bonds 


if  desired,  be  paid  in  advance  of  the  limit  of 
time  required  by  law.  As  each  instalment  is 
paid,  the  payment  must  be  certified  to  the 
Compti-oUer  by  the  President  or  Cashier  under 
seal  of  the  bank.  The  form  for  this  certificate 
is  given  on  page  153. 

On  page  14  is  given  a  method  of  enforcing 
payment  of  capital. 

At  this  time  the  directors  should  procure  a 
bank  seal.  The  seal  may  be  made  as  simple  or 
as  ornate  as  desired.  The  only  requirement  is 
that  it  must  bear  the  full  corporate  title  of  the 
bank,  including  the  name  of  the  City.  This 
title  is  in  most  instances  engraved  just  inside  the 
circumference  of  a  circular  or  oval  die,  in  the 
centre  of  which  there  may,  if  desired,  be  placed 
a  design  typifying  the  business  of  the  institution. 

The  next  step  in  the  bank's  organization  is  the 
deposit  of  bonds  with  the  Treasurer  of  the 
United  States  through  the  Comptroller  of  the 
Currency.  Every  bank  organized  under  National 
laws  is  required  to  deposit  and  keep  with  the 
Treasurer  interest-bearing  Government  secur- 
ities. These  are  called  "Charter  Bonds." 
Their  deposit  with  the  Treasurer  of  the  United 
States  is  one  of  the  things  necessary  to  be  done 

8 


Deposit  of  Bunds 


before  a  Certificate  of  Authority  to  commence 
business  will  be  issued.  The  Charter  Bonds  or 
others  substituted  for  those  originally  deposited 
must  remain  on  deposit  with  the  Treasurer  dur- 
ing the  entire  period  of  the  bank's  existence. 

The  minimum  amount  of  bonds  necessary  to  be 
deposited  with  the  Comptroller  is  given  below; 

Capital.  Amount  of  Bonds. 

$150,000  or  less.  One-fourth  of  Capital. 

More  than  $150,000.  Mimmum  deposit  of  $50,000. 

The  Charter  Bonds  deposited  with  the  Comp- 
troller of  the  Currency  may  be  used  as  a  basis 
for  a  like  amount  of  circulation.  The  taking 
out  of  circulation  is,  however,  not  required. 

Complete  information  regarding  the  method 
of  taking  out  circulation,  the  ordering  of  plates, 
etc.,  will  be  found  in  the  Chapter  on  Circulation 
on  page  24. 

Upon  the  deposit  of  the  bonds  necessary  to  its 
organization  (the  Charter  Bonds  referred  to),  the 
Comptroller  of  the  Currency  will,  provided  he 
is  satisfied  that  the  Association  has  complied  with 
all  the  requirements  of  the  law,  and  that  the 
organization  has  been  made  in  good  faith  for  the 
legitimate  objects    contemplated    by  the    Bank 

9 


Issue  of  Charter 


Act,  authorize  the  Association  to  commence  the 
business  of  banking.  The  general  form  of  the 
Certificate  of  Authority  to  begin  business,  or,  as 
it  is  generally  understood,  the  Charter  issued  to 
a  National  Banking  Association,  is  given  on 
page  154.  This  certificate  gives  to  the  Associ- 
ation the  right  to  carry  on  the  business  of  a 
National  Bank  under  its  approved  title,  for  a 
period  of  twenty  years  from  the  date  of  the  exe- 
cution of  the  organization  certificate,  but  not 
from  the  date  of  the  Comptroller's  Authoriza- 
tion to  commence  business. 

The  Certificate  of  Authorization  to  commence 
business  must  be  published  for  a  period  of  sixty 
days  in  a  newspaper  published  in  the  city  or 
county  in  which  the  bank  is  located  or,  if  no 
newspaper  is  published  in  such  city  or  county, 
then  in  a  newspaper  published  in  a  locality  near- 
est to  the  place  of  business  of  the  bank. 

At  the  expiration  of  this  period  of  sixty  days, 
the  bank  must  send  to  the  Comptroller  of  the 
Currency,  an  Oath  of  Publication  signed  by  the 
publisher  of  the  newspaper  in  which  the  Certifi- 
cate has  appeared.  This  should  be  in  the  form 
given  on  page  155. 

It  is  desired  by  the  Comptroller's   office  that 

10 


Charter  Number 


in  ordering  stationery,  provision  be  made  for  the 
printing  of  the  Charter  number  of  the  bank  on 
letter  heads. 

After  the  receipt  of  the  certificate  authorizing 
the  commencement  of  business,  the  bank  should 
promptly  advise  the  Comptroller  of  the  date  on 
which  actual  business  begins. 

The  Association  is  then  ready  to  welcome  de- 
positors and  enter  actively  into  the  business  of 
banking. 


11 


QUALIFICATIONS   OF   DIRECTORS 

r 

Any  stockholder  who  is  a  citizen  of  the  United 
States  and  is  the  possessor  in  his  own  right 
of  at  least  ten  shares  of  the  capital  stock  of  the 
association,  is  eligible  as  a  director,  provided 
the  stock  be  not  hypothecated  or  in  any  way 
pledged  as  security  for  any  loan  or  debt.  Should 
a  director  cease  to  be  the  absolute  owner  of  the 
ten  shares,  he  becomes  disqualified  as  a  member 
of  the  Board;  otherwise  a  director  holds  office  for 
one  year  and  until  his  successor  is  elected  and 
has  qualified. 

It  is  necessary  that  at  least  three-fourths  of 
the  directors  shall  have  resided  in  the  State  or 
territory  in  which  the  bank  is  located  for  a  year 
or  more  immediately  preceding  their  election, 
and  they  must  maintain  such  residence  during 
their  continuance  in  office. 

Each  share  of  stock  held  entitles  its  owner  to 
one  vote  at  any  meeting  of  shareholders. 

Voting  by  proxy  is  permissible  when  the  proxy 

12 


Voting  by  Pro.rij 


has  been  duly  authorized  in  writing.  The  prac- 
tice of  voting  by  proxy  is  common  at  all 
meetings  of  stockholders  of  National  Banking 
Associations,  and  national  banks  frequently  en- 
close with  their  notices  of  stockholders'  meetings 
blank  proxies  in  favor  of  certain  persons  who 
are  expected  to  be  present  at  the  proposed  meet- 
ing and  who  may  be  relied  upon  to  cast  the  vote 
of  the  shareholder  executing  the  proxy  in  the 
manner  directed  by  him.  A  form  of  proxy  for 
use  at  a  meeting  of  stockholders  of  a  National 
Banking  Association  is  suggested  on  page  156. 

No  officer,  clerk,  or  bookkeeper  of  the  associa- 
tion may  act  as  proxy.  The  Comptroller  has 
held  that  a  director  is  an  officer  within  the  mean- 
ing of  this  prohibition.  No  stockholder  whose 
liability  for  subscriptions  to  the  capital  stock  is 
past  due  and  unpaid,  shall  be  entitled  to  vote  at 
a  meeting  of  shareholders. 

Cumulative  voting  is  not  permissible.  That 
is  to  say,  a  stockholder  owning  ten  shares  of 
stock  and  attending  a  meeting  at  which,  say,  six 
directors  are  to  be  elected,  cannot  cast  sixty 
votes  for  any  one  person  as  director.  He  is  per- 
mitted only  to  cast  ten  votes  for  each  of  six 
candidates. 

13 


ENFORCING   PAYMENT  OF  CAPITAL 

r 

If  any  stockholder  or  his  assignee  fails  to  pay 
any  instalment  on  capital  stock  when  such  pay- 
ment is  due,  the  directors  of  the  association  may 
sell  the  stock  at  public  auction  after  three  weeks' 
notice  of  the  proposed  sale  has  been  given  in  a 
newspaper  published  in  the  city  or  county  in 
which  the  bank  is  located.  The  stock  shall  be 
sold  for  not  less  than  the  amount  due,  together 
with  the  expense  of  the  advertisement  and  sale. 
If  the  sum  offered  by  the  highest  bidder  be  more 
than  the  amount  due  on  the  stock  and  the  ex- 
pense of  advertisement  and  sale,  the  excess  must 
be  paid  to  the  original  stockholder.  If  it  is  not 
possible  to  sell  the  stock  for  a  sum  sufficient  to 
cover  the  instalment  due  and  the  expenses  of 
sale,  the  amount  already  paid  by  the  stockholder 
is  forfeited  to  the  association.  The  stock  must 
then  be  sold  within  six  months  from  the  time  of 
forfeiture  in  such  manner  as  may  be  ordered  by 
the  Directors.     If  the  stock  is  not  sold,  it  must 

14 


Cancelled  Stock 


be  cancelled  and  deducted  from  the  capital  stock 
of  the  association. 

If  stock  is  cancelled  and  deducted  from  the 
capital,  as  provided  in  the  foregoing  paragraph, 
in  an  amount  which  reduces  the  capital  below 
the  minimum  required  by  law  ( as  giv^en  in  the 
table  on  page  3),  it  becomes  necessary  for  those 
having  the  matter  of  organzation  in  charge  to  in- 
crease the  capital  stock  to  the  required  amount. 
If  this  is  not  done  within  thirty  days,  the  Comp- 
troller has  power  to  appoint  a  receiver  to  close 
up  the  business  of  the  association. 


15 


CONVERSION    OF    STATE 

BANKS 

r 

ANY  institution  operating  under  State 
Laws  may  be  made  a  national  bank  by 
conversion.  Conversion  may  be  accom- 
plished in  either  one  of  two  ways  : 

First.  The  owners  of  two-thirds  of  the  capital 
stock  of  the  bank  may  authorize  a  majority  of 
the  directors  to  execute  an  Organization  Certifi- 
cate changing  and  converting  the  bank  into  a 
national  association,  or 

Second.  A  State  bank  may  be  placed  in  vol- 
untary liquidation  in  conformity  with  the  laws 
of  the  State  in  which  it  is  located.  A  national 
bank  may  then  be  organized  by  those  interested 
in  the  matter  of  conversion  and  the  new  organ- 
ization will  have  the  power  to  purchase  such  as- 
sets of  the  State  bank  as  a  national  bank  is  not 
prohibited  to  hold. 

A  general  statement  of  assets  which  may  be 
held  by  a  national  bank  together  with  such  mat- 
ters as  a  national  bank  may  not  include  in  its 

16 


Application  to  Compti'oller 


business  operations  will  be  found  in  the  chapter 
on  "  Restrictions  "  on  page  107. 

On  page  157  is  given  a  general  form  of  au- 
thority for  conversion  of  a  State  bank.  The  sig- 
natures of  the  owners  of  at  least  two-thirds  of 
the  stock  of  the  State  bank  must  appear  on  this 
document. 

After  the  execution  of  the  authority  for  con- 
version, a  majority  of  the  directors  (acting  in  ac- 
cordance with  such  authority  for  conversion) 
should  make  an  application  to  the  Comptroller 
of  the  Currency  in  the  form  given  on  page  158. 

Upon  the  receipt  of  the  Comptroller's  approval 
of  conversion  the  directors  should  execute  Ar- 
ticles of  Association  in  substantially  the  form 
given  on  page  159. 

The  directors  should  also  execute  an  Organ- 
ization Certificate  in  the  form  given  on  page 
160. 

The  directors  should  also  execute  a  certificate 
in  the  form  given  on  page  162,  showing  what 
amount  of  paid  in  and  unimpaired  capital  the  in- 
stitution has. 

It  should  be  noted  in  this  connection  that  the  capital  of  a 
State  bank  which  purposes  converting  into  a  national  bank 
must  be  paid  in  full  before  the  Comptroller  of  the  Currency 

17 


Coinptroller  s  Certificate 


will  issue  a  certificate  authorizing  the  bank  to  begin  business 
as  a  national  association.  That  is  to  say,  a  State  bank  con- 
verting may  not  take  advantage  of  the  provision  permitting 
the  payment  of  50  per  cent,  of  the  capital  on  organizing  and 
the  remainder  in  instalments  following  the  issuance  of  the 
charter. 

A  bank  which  is  the  outcome  of  a  conversion  may,  under 
the  regulations  of  the  Comptroller's  Office,  issue  stock  cer- 
tificates having  a  par  value  of  less  than  $100,  providing  the 
par  value  of  the  stock  certificates  of  the  State  bank  before 
conversion  into  a  national  bank  has  been  less  than  that 
amount. 

After  the  Comptroller  has  received  the  fore- 
going papers  properly  executed,  he  will  issue  a 
certificate  in  the  form  given  on  page  154,  au- 
thorizing the  bank  to  commence  business.  This 
certificate  and  all  subsequent  papers  and  proceed- 
ings relative  to  the  conversion  of  a  State  bank 
are  similar  to  those  used  in  the  case  of  associ- 
ations organizing  from  the  beginning. 


18 


CONVERSION    OF    PRIVATE 

BANKS 


THE  law  does  not  provide  for  the  conver- 
sion of  private  banks  into  national 
banks.  If  it  is  desired  to  effect  a  re- 
organization, the  assets  of  the  private  bank  must 
be  liquidated  and  an  organization  from  the  be- 
ginning undertaken  as  provided  in  the  Chapter 
on  detailed  steps  in  organization. 

If  the  owners  of  a  private  bank  desire  to  en- 
gage in  banking  under  the  national  system,  they 
are  subject  to  the  same  regulations  as  those  pro- 
vided for  the  organization  of  a  new  bank,  and 
the  method  of  procedure  is  exactly  similar  to 
that  provided  under  the  second  method  of  re- 
organization of  State  banks.  That  is  to  say, 
they  must  require  the  payment  in  cash  of  the 
entire  capital  stock  and  must  submit  to  the 
office  of  the  Comptroller  of  the  Currency  a 
statement  signed  by  their  directors  to  the  effect 
that  in  acquiring  assets  from  the  closed  private 

19 


Prohibited  Assets 


bank  they  will  not  receive  any  items  specifically 
prohibited  by  the  National  Bank  Act.  Those 
specifically  prohibited  assets  are  real  estate  other 
than  banking  premises,  loans  collateraled  by 
real  estate,  stocks  of  other  corporations,  and  any 
loan  in  excess  of  10  per  cent,  of  the  paid-in  capi- 
tal stock  of  the  national  bank. 


20 


CONSOLIDATION 

r 

CONSOLIDATION  of  national  banks 
may  be  effected  in  three  ways  : 
First  :  Without  increase  of  capital- 
Under  this  method  the  directors  of  the  absorb- 
ing bank  may  enter  into  a  contract  with  the  di- 
rectors or  agents  of  another  institution  to  pur- 
chase its  assets,  assume  liabilities  to  depositors 
and  other  creditors,  and  to  pay  shareholders  for 
their  stock  an  amount  equal  to  the  value  of 
assets  purcliased  in  excess  of  liabilities  to  deposi- 
tors and  other  creditors.  It  is  necessary,  in  or- 
der to  effect  a  consolidation  under  this  method, 
to  place  the  bank  to  be  absorbed  in  voluntary 
liquidation.  Any  expenses  incident  to  liquida- 
tion are  to  be  deducted  from  the  amount  paid 
to  the  shareholders  of  the  liquidating  bank  for 
their  stock. 

Second :  By  an  increase  of  capital  stock  of  the 
absorbing  bank,  the  increase  being  equal  to  the 
capital   stock  of  the  liquidating  bank.     Under 

21 


Payment  oj  Capital 


this  method  the  additional  shares  of  the  absorb- 
ing bank  may  be  sold  to  shareholders  of  the  bank 
to  be  hquidated,  provided  the  consent  of  the 
shareholders  of  the  absorbing  association  has  been 
previously  obtained.  As  the  payment  of  capital 
originally  or  on  account  of  increase  must  neces- 
sarily be  made  in  money,  and  not  in  promissory 
notes  or  other  "evidences  of  debt,"  the  Comp- 
troller does  not  recognize  the  right  of  those  hav- 
ing the  consolidation  in  charge  to  accept  shares 
of  the  liquidated  institution  and  issue  in  ex- 
change therefor  certificates  of  the  absorbing 
bank.  In  effecting  a  consolidation  under  this 
second  method,  therefore,  shareholders  of  the 
closed  association  must  be  paid  the  value  of 
their  stock,  less  the  expenses  of  liquidation,  in 
money.  The  proceeds  thus  received  are  then 
available  in  payment  of  the  shares  in  the  absorb- 
ing bank  to  which  the  former  holders  of  shares  in 
the  liquidated  bank  may  be  entitled. 

The  right  of  shareholders  to  participate  pro 
rata  in  an  increase  of  stock  is  well  recognized, 
and  is  generally  incorporated  in  the  Articles  of 
Association.  In  order  to  avoid  possible  htiga- 
tion  over  this  point,  it  is  customary  to  secure 
waivers  of  right  to  participate  from  shareholders 

22 


Consolidation  by  Liquidation 


of  the  absorbing  association.  The  directors  of 
the  absorbing  bank  are  then  at  hberty  to  con- 
tract for  the  purchase  of  assets  and  to  assume 
HabiHties  to  depositors  and  other  creditors  of  the 
hquidating  bank. 

Third:  A  third  method,  and  one  which  is  oc- 
casionally pursued,  is  to  place  both  of  the  inter- 
ested banks  in  voluntary  liquidation,  organize 
anew  under  a  different  corporate  title,  and  ac- 
quire the  business  of  the  liquidating  associations 
in  the  manner  outlined  under  the  second  method. 
This  plan  of  procedure  enables  the  incorporators 
to  place  the  stock  as  they  may  determine. 

Should  the  persons  interested  in  the  consolida- 
tion desire  to  avoid  the  trouble  incident  to  placing 
both  banks  in  voluntary  liquidation,  as  suggested 
in  the  foregoing  paragraph,  it  is  possible  for  them 
to  provide  for  continuing  the  business  of  the  in- 
terested associations  by  changing  the  name  of 
one  of  the  banks  in  accordance  with  the  plan 
given  on  page  100,  increase  the  capital,  and  pro- 
ceed under  the  second  method  for  consolidation. 


23 


NATIONAL  BANK  NOTE 
CIRCULATION 

r 

EVERY  national  bank  may  issue  circulat- 
ing bank  notes  to  tlie  amount  of  its  paid- 
in  capital.  A  bank  must,  however,  first 
place  with  the  Treasurer  of  the  United  States 
interest-bearing  United  States  Government 
bonds  equal  in  face  value  to  the  amount  of  the 
notes  to  be  issued.  This  deposit  of  bonds  is 
made  to  secure  the  payment  of  the  bank's  notes 
on  demand.  Banks  depositing  bonds  for  circula- 
tion surrender  title  to  them,  the  Treasurer  hold- 
ing them  in  trust  primarily  for  the  purpose  of 
securing  the  redemption  of  the  bank's  circula- 
tion. In  case  a  bank  fails  to  redeem  any  of  its 
notes  on  demand,  the  Comptroller  of  the  Cur- 
rency is  empowered  to  appoint  a  receiver  to  sell 
the  bonds,  and  with  the  proceeds  redeem  the 
bank's  outstanding  circulation. 
A  national  bank  note 

Is  not  legal  tender. 
Is  not  receivable  for  Customs. 
24 


Bank  Note  Qualities 


Is  not  applicable    for    payment    of   interest    on 

the  National  debt. 
Is  not  counted  in  the  reserve  of  a  national  bank. 

With  these  exceptions  a  national  bank  note 
has  the  ordinary  qualities  of  money. 

Every  national  bank  must,  by  law,  accept  the 
notes  of  every  other  national  bank  at  their  par 
value.  * 

After  a  national  bank  has  complied  with  the 
preliminary  requirements  of  the  Comptroller  of 
the  Currency,  as  outlined  in  the  Organization 
Chapter,  it  must,  before  commencing  business, 
deposit  with  the  Treasurer  of  the  United  States, 
Government  Bonds  known  as  "  Charter  Bonds." 
This  term  is  explained  in  the  Organization  Chap- 
ter. Against  these  bonds  a  bank  may  issue 
circulating  notes  up  to  their  par  value,  although 

*  The  only  national  banks  that  are  not,  by  law,  forced  to  accept 
the  notes  of  every  other  national  bank,  are  "  gold  banks."  Gold 
banks  are  organized  for  the  purpose  of  issuing  circulating  notes 
specifically  payable  in  gold  coin  of  the  United  States.  They  are  in- 
corporated in  a  manner  similar  to  all  national  banks,  and  differ  only 
in  the  note  issuing  particular.  Gold  banks  must  deposit  with  the 
Treasurer  of  the  United  States  interest-bearing  Government  Bonds 
and  can  then  issue  circulation  payable  in  gold  coin  of  the 
United  States  to  an  amount  equal  to  80  per  cent,  of  the  face  value 
of  the  bonds.  There  are  none  of  these  associations  in  existence  at 
the  present  time  ;  therefore,  the  regulation  is  practically  obsolete. 

25 


Deposit  oj  Bonds 


it  is  not  necessary  to  do  so.  The  bonds,  how- 
ever, must  be  deposited  before  a  bank  begins 
business,  whether  or  not  it  intends  to  use  them 
as  a  basis  for  circulation. 

Any  bank  depositing  bonds  with  the  Treas- 
urer of  the  United  States  as  security  for  circu- 
lation, will  be  given  a  power  of  attorney  by  the 
Comptroller  of  the  Currency  to  receive  the  in- 
terest as  it  accrues.  A  bank  will  continue  to 
receive  this  interest  until  the  bonds  are  with- 
drawn, unless  it  fails  to  pay  an  assessment  levied 
by  the  Treasurer,  or  fails  to  redeem  its  notes 
on  demand,  in  which  event  the  interest  will  re- 
vert to  the  Treasury. 

The  bonds  deposited  with  the  Treasurer  as 
security  for  circulation,  must  be  in  registered 
form.  Should  a  bank  have  coupon  bonds,  the 
Secretary  of  the  Treasury  will  exchange  for 
them  registered  bonds.  The  only  expense  inci- 
dent to  such  an  exchange,  is  the  cost  of  trans- 
portation, which  must  be  paid  by  the  bank.  If, 
after  a  bank  has  deoosited  a  certain  issue  of  se- 
curities  with  the  Treasurer,  it  should  desire  to 
make  substitution  of  some  other  issue,  an  appli- 
cation to  the  Comptroller  is  necessary. 

Bonds  that  are  assigned  to  the  Treasurer  of 

26* 


Substituting  Bonds 


the  United  States  as  security  for  circulation, 
should  be  sent  to  the  Comptroller  of  the  Cur- 
rency. By  him  they  are  placed  in  the  custody 
of  the  Treasurer,  who  gives  a  receipt  in  dupli- 
cate, one  of  which  is  sent  to  the  bank  and 
the  other  retained  by  the  Comptroller.  As  this 
receipt  must  be  sent  to  the  Treasurer  before  a 
bank  can  substitute  one  issue  of  bonds  for  an- 
other, it  is  very  important  that  it  be  filed  where 
readily  obtainable.  If  the  receipt  is  lost  or  mis- 
placed, considerable  delay  may  result  in  making 
such  substitution. 

A  bank  must  have  the  authority  of  the  Board 
of  Directors  if  it  desires  to  substitute  one  issue  of 
bonds  for  another.  An  application  should  then 
be  made  to  the  Comptroller  accompanied  by  a 
copy  of  the  Directors'  resolution  under  seal  of  its 
bank  and  with  the  receipt  of  the  Treasurer  for 
the  bonds  which  it  is  desired  to  withdraw  or  sub- 
stitute. A  form  of  Directors'  resolution  author- 
izing an  exchange  will  be  found  on  page  164. 

Should  the  market  value  of  any  of  the  bonds 
deposited  as  security  for  circulation  fall  below 
their  face  value,  the  Comptroller  may  demand 
enough  more  bonds  or  legal  tender  to  fully  pro- 
tect the  circulating  notes  that  have  been  issued. 

rt 


Assigning  Bonds 


The  Comptroller  of  the  Currency  will  accept 

any  unmatured  issue  of  United  States  Bonds  to 
secure  circulation.  At  present  there  are  four 
such  issues  outstanding — 

2^  Consols  payable  after  1930, 
3^  bonds  payable  after  1908, 
4^  bonds  payable  after  1907, 
4^  bonds  payable  after  1925. 

After  a  bank  has  purchased  the  necessary 
Charter  Bonds,  or  as  many  more  as  it  desires  to 
deposit  for  circulation,  they  should  be  assigned 
in  the  proper  form  on  the  back  of  the  bonds  to 
the 

"  Treasurer  of  the   United   States  in  trust  for  The 

National  Bank  of ." 


The  bonds  should  then  be  forwarded  to  the 
Comptroller  of  the  Currency  with  a  letter  stating 
the  purpose  of  the  deposit. 

If  a  bank  desires  to  take  out  circulation,  it 
should  send  to  the  Comptroller,  when  forwarding 
its  Charter  Bonds,  an  order  for  the  amount  of 
circulation  desired.  It  is  not  possible  for  a  bank 
to  obtain  its  original  order  for  circulation  imme- 
diately on  the  deposit  of  its  bonds,  as  the  first 

£8 


Engraving  Plates 


bond  deposit  is  necessary  to  complete  an  organiza- 
tion and  secure  a  charter  number,  and  this  char- 
ter number  is  printed  on  the  notes  of  a  bank. 
After  a  bank  is  organized  and  doing  business, 
it  may  order  circulation  printed  in  advance  and 
not  make  a  bond  deposit  until  the  bank  is  ready 
to  put  the  new  notes  into  circulation. 

A  form  of  blank  for  ordering  new  circulation 
will  be  found  on  page  165. 

After  a  bank  has  deposited  its  bonds  and  or- 
dered its  circulation,  the  Comptroller  will  have 
plates  engraved.  There  are  three  kinds  of  plates, 
one  of  $5  denomination  with  four  notes,  an- 
other of  $10  and  $20  denomination  with  four 
notes,  and  a  third  of  $50  and  $100  denomina- 
tions with  two  notes.  These  plates  are  made  at 
the  expense  of  the  issuing  bank.  To  prevent  the 
loss  of  plates  or  the  illegitimate  issuing  of  notes 
they  are  kept  in  the  custody  of  the  Comptroller. 

The  cost  for  engraving  a  plate  of  five-dollar 
denomination  is  $75,  of  ten  and  twenty-dollar 
denominations  is  $75,  and  of  fifty-  and  one  hun- 
dred-dollar denominations  is  $50.  No  charge 
is  made  for  the  printing  of  notes. 

It  takes  about  forty  days  to  secure  the  first 
order  of  circulating  notes.     To  get  a  future  or- 

29 


Ordering  Circulation 


der  will  take  about  twenty  days,  the  time  for  the 
first  order  being  longer  because  of  the  necessity 
of  engraving  plates. 

When  a  bank  orders  circulation  in  accordance 
with  the  Comptroller's  form,  it  must  be  careful 
to  keep  in  mind  that  the  order  is  in  sheets  with 
a  certain  number  of  notes  on  each  sheet,  and  it 
should  request  amounts  that  can  be  made  from 
such  multiples.  It  must  also  take  into  consider- 
ation the  fact  that  only  one-third  of  the  total 
amount  of  notes  that  it  orders  can  be  in  five-dollar 
denomination.  For  instance :  a  bank  capitalized 
at  $25,000,  which  deposits  one-quarter  of  that 
amount  in  Government  bonds,  is  entitled  to  se- 
cure $6,250  of  circulation.  Keeping  in  mind  that 
only  one-third  of  a  bank's  circulation  can  be  in 
five-dollar  notes,  it  should  divide  the  total  amount 
of  circulation  to  be  ordered  in  such  a  manner  that 
an  even  number  of  sheets  are  printed.  That  is,  a 
bank  having  the  privilege  of  issuing  $6,250  in 
circulating  notes,  only  one-third  of  which  may 
be  in  five-dollar  notes,  might  order  100  sheets  of 
five-dollar  notes,  which,  while  it  would  not  be 
the  actual  limit  allowed,  would  be  a  round 
amount  ;  it  could  order  forty  sheets  in  ten-  and 
twenty-dollar  notes,  and,  say,  fifteen  sheets  in 

30 


Delivery  of  Notes 


fifty-  and  one  hundred-dollar  notes.  This  would 
make  the  $6,250  of  notes  desired  and  would  per- 
mit of  an  even  number  of  sheets  being  printed. 
If  this  is  not  done,  the  Comptroller  will  return 
the  order  for  correction. 

The  original  order  by  a  bank  for  circulation 
should  be  about  one  and  one-quarter  times  the 
amount  of  circulation  that  can  be  taken  out 
against  the  bonds  that  have  been  deposited.  If 
a  bank  is  permitted  to  take  out  $6,250  of  circu- 
lation, it  should  place  an  order  for  approximately 
$7,800.  The  reason  for  this  is  that  it  is  neces- 
sary for  the  Comptroller  to  have  on  hand  enough 
notes  to  replace  without  delay  any  worn-out  or 
mutilated  circulation  sent  in  for  redemption. 
Banks  should  always  keep  an  account  of  the 
amount  of  their  incomplete  currency  in  the 
Comptrollers  office,  and  request  him  to  print 
promptly  additional  supplies  a  sufficient  time  in 
advance  of  the  exhaustion  of  these  notes  previ- 
ously ordered,  to  avoid  delay  in  the  preparation 
of  new  notes. 

After  the  new  notes  are  printed  by  the  Gov- 
ernment, they  are  expressed  to  the  issuing  bank 
at  the  bank's  expense.  They  are  forwarded  in 
blank,  and  when  received  are  ready  for  circulation 

31 


Signing  of  Notes 


with  the  exception  of  the  signatures  of  the  presi- 
dent or  vice-president  and  cashier.  The  original 
intent  of  the  National  Bank  Act  was  to  have 
national  bank  notes  bear  the  written  signature  of 
the  president  or  vice-president  and  cashier  of  the 
association.  A  later  Act,  however,  provided  for 
the  redemption  of  all  national  bank  notes  whether 
or  not  they  were  signed  by  the  officers  of  an  as- 
sociation. Prior  to  the  passage  of  this  last  Act, 
the  Comptroller's  office  held  that  written  signa- 
tures were  a  necessity,  but,  since  that,  while  the 
office  has  not  authorized  nor  sanctioned  any 
change  in  this  respect,  it  has  made  no  objection 
to  printed  or  stamped  signatures  as  distinguished 
from  written  signatures. 

Whether  written  or  stamped,  the  signatures 
appearing  on  the  notes  must  be  those  of  the 
president  or  vice-president  and  cashier  of  the 
bank.  An  acting  president  or  vice-president,  an 
assistant  or  acting  cashier,  is  not  authorized  to 
sign  circulating  notes. 

Immediately  atler  a  bank  receives  its  first  cir- 
culation from  the  Comptroller,  it  is  required  to  de- 
posit with  the  Treasurer  of  the  United  States  a 
sum  of  money  equal  to  5  per  cent,  of  such  circu- 
lation. 

32 


Redemption  Fund 


Remittances  for  credit  of  the  5  per  cent,  re- 
demption fund  may  be  made 

By  check  drawn  on  New  York  payable  to  the  "  Assistant 
Treasurer  of  the  United  States  in  New  York,"  collectible 
through  the  Clearing  House,  forwarded  directly  to  the  Assist- 
ant Treasurer  with  instructions  to  deposit  the  amount  to  the 
credit  of  the  5  per  cent,  fund  and  to  forward  the  certificate 
of  deposit  to  the  Treasurer  of  the  United  States. 

By  a  deposit  of  lawful  money  with  the  Assistant  Treasurer 
of  the  United  States  in  Baltimore,  Boston,  Chicago,  Cincin- 
nati, New  Orleans,  New  York,  Philadelphia,  St.  Louis,  or  San 
Francisco  on  account  of  the  5  per  cent.  fund.  Banks  not 
located  in  a  city  where  there  is  a  Sub-Treasury,  can  request 
their  correspondent  to  make  the  necessary  deposit.  The 
certificate  that  is  received  for  the  deposit  must  be  forwarded 
immediately  to  the  Treasurer  of  the  United  States  as  no 
credit  will  be  given  until  he  receives  such  certificate. 

By  sending  directly  to  the  Treasurer  of  the  United  States, 
Washington,  D.  C,  the  proper  amount  of  lawful  money.  This 
package  if  specifically  marked  "  for  the  credit  of  the  5  per 
cent,  fund  "  will  be  transmitted  by  express  companies  at  Gov- 
ernment rates.  If  the  bank  does  not  prepay  the  express 
charges,  the  Treasurer  will  pay  them  at  Government  rates  and 
deduct  the  amount  from  the  bank's  remittance. 

The  Assistant  Treasurers  of  the  United  States 
are  authorized  to  receive  deposits  of  lawful 
money  from  banks  on  account  of  their  5  per  cent, 
fund  and  to  issue  Certificates  of  Deposit  there- 

33 


Redemption  Remittances 


for.  They  are  not  authorized  to  receive  remit- 
tances by  express  and  the  only  Assistant  Treas- 
urer who  can  receive  checks  on  that  account  is 
the  one  at  New  York. 

A  bank  which  is  not  located  in  a  city  where 
there  is  a  United  States  Assistant  Treasurer, 
may  have  its  correspondent  in  Baltimore,  Bos- 
ton, Chicago,  Cincinnati,  New  Orleans,  New 
York,  Philadelphia,  San  Francisco,  or  St.  Louis, 
make  a  deposit  with  the  Assistant  Treasurer  for 
its  account,  or  its  correspondent  at  Washington 
may  make  a  deposit  at  the  Treasury  Department. 
A  bank  in  one  of  the  Sub-Treasury  cities  mak- 
ing deposit  with  the  Assistant  Treasurer  for  the 
credit  of  the  5  per  cent,  fund  of  an  out-of-town 
bank,  receives  a  Certificate  of  Deposit  which  in 
turn  it  should  forward  to  the  Treasurer  of  the 
United  States.  Upon  receipt  of  this  Certificate 
of  Deposit  by  the  Treasurer  the  5  per  cent,  fund 
will  be  credited  and  the  out-of-town  bank  will 
be  notified  by  the  Department  direct.  The 
Treasurer's  acknowledgment  of  a  deposit  for 
credit  of  this  5  per  cent,  fund  is  made  only  to 
the  bank  whose  5  per  cent,  fund  is  so  credited. 
When  another  bank  makes  the  deposit  on  ac- 
count of  a  bank  whose  fund  is  to  be  credited. 


Presenting  Notes 


the   depositing   bank   receives   no   acknowledg- 
ment. 

A  national  bank  cannot  count  in  its  reserve 
any  deposit  held  by  the  Treasurer  in  excess  of 
the  required  amount  of  the  5  per  cent.  fund. 

The  Redemption  Fund  is  used  by  the  Treas- 
urer in  redeeming  notes  presented  to  him.  The 
amount  of  the  Redemption  Fund  is  calculated  on 
the  amount  of  notes  issued  to  a  bank,  and  no  de- 
duction is  made  should  all  or  part  of  such  notes 
be  lost,  stolen,  or  put  into  circulation  without 
the  regular  signature  of  the  president  or  vice- 
president  and  cashier. 

Notes  must  be  presented  to  the  Treasurer 
for  redemption  in  sums  of  $1,000  or  any  mul- 
tiple. The  Treasurer,  on  redeeming  the  notes, 
charges  them  to  the  various  issuing  banks,  and 
notifies  such  banks  on  the  first  day  of  each 
month,  or  oftener,  of  the  amount  of  their  notes 
so  redeemed  and  the  corresponding  reduction  of 
their  5  per  cent.  fund.  When  a  bank  receives 
such  notification,  it  must  immediately  deposit 
with  the  Treasurer  lawful  money  equal  to  the 
amount  of  its  redeemed  notes,  thus  keeping  the 
5  per  cent,  fund  intact. 

Should  a  bank  reduce  its  circulation  either  by 

35 


Washington  Representative 


deposit  of  lawful  money  or  by  permitting  notes 
to  be  redeemed  by  the  Treasurer  and  destroyed 
and  asking  for  no  new  notes  to  take  their  place, 
the  amount  of  the  5  per  cent,  fund  may  be  cor- 
respondingly reduced.  In  such  a  case  the  Comp- 
troller will,  upon  receiving  the  proper  advice,  im- 
mediately surrender  any  excess  that  there  may 
be  in  the  5  per  cent,  fund  made  by  such  reduction 
or  destruction  of  notes.  The  Comptroller  will 
not  so  release  a  portion  of  the  5  per  cent,  fund 
until  the  details  of  the  reduction  of  circulation  are 
completed  by  depositing  lawful  money  and  with- 
drawing the  bonds. 

Notes  that  are  presented  to  the  Treasurer  for 
redemption  are  turned  over  to  the  National 
Bank  Redemption  Agency  of  the  Treasurer's 
office,  and  are  there  assorted.  Such  notes  as 
are  in  good  condition  are  returned  to  the  various 
issuing  banks.  Those  that  are  unfit  for  circula- 
tion are  delivered  to  the  Comptroller  of  the  Cur- 
rency for  cancellation  and  destruction  and  new 
notes  are  forwarded  to  the  issuing  banks. 

Every  national  bank  is  compelled,  by  law,  to 
have  in  Washington  a  legal  representative  to 
witness  the  destruction  of  its  mutilated  currency. 

The  National  City  Bank,  through  its  relations 

36 


Worn  Circulation 


with  the  Riggs  National  Bank  of  Washington,  is 
in  a  position  to  have  these  services  properly  per- 
formed for  its  correspondents,  and  makes  no 
charge  to  them  for  such  service. 

When  a  bank's  worn-out  notes  are  destroyed, 
the  Comptroller  issues  new  notes  in  their  place. 
The  expense  of  printing  new  notes  is  borne  by 
the  Government. 

If  the  amount  redeemed  does  not  exceed  the 
5  per  cent,  deposit  of  a  bank,  the  notes  fit  for 
circulation  are  promptly  forwarded  to  such  a  bank 
by  express,  and  any  notes  unfit  for  circulation 
are  delivered  on  the  same  day  to  the  Comptroller 
of  the  Currency.  If  a  bank's  5  per  cent,  fund 
is  overdrawn  by  such  redemption,  an  amount  of 
notes  equal  to  the  deficit  is  held  by  the  Treas- 
urer until  the  bank  makes  good  the  fund  by 
a  deposit  of  "lawful  money."  As  soon  as  this 
is  done,  all  the  notes  are  returned  to  the  issuing 
bank. 

A  national  bank  must  pay  the  charges  for 
transportation  and  the  cost  for  assorting  re- 
deemed notes.  At  the  end  of  each  fiscal  year, 
account  having  been  kept  of  the  expenses  of  the 
National  Bank  Redemption  Agency,  the  several 
banks  are  assessed  in  proportion  to  the  amount 

37 


389082 


Asso7^ting  Notes 


of  their  notes  redeemed,  and  this  sum  is  then 
charged  to  their  5  per  cent,  account.  If  a  bank 
deposits  "  lawful  money  "  for  the  retirement  of 
its  circulation,  it  is  assessed  at  the  time  it  makes 
such  a  deposit  for  the  cost  of  transporting  and 
redeeming  the  notes  then  outstanding.  The 
assessment  is  equal  to  the  average  cost  of  the 
redemption  of  national  bank  notes  during  the 
preceding  year.  When  a  bank  is  notified  of  an 
assessment,  it  should  immediately  remit  the 
amount  due. 

Any  bank  sending  notes  to  the  Treasurer 
should  first  have  them  assorted  by  denominations 
and  enclosed  in  paper  straps.  No  straps  should 
contain  more  than  one  hundred  notes,  and  each 
package  should  be  marked  with  the  amount  of 
its  contents.  A  memorandum  giving  the  amount 
of  each  denomination  of  notes,  the  total  amount 
in  the  package,  the  address  of  the  bank  sending, 
and  the  disposition  to  be  made  of  the  proceeds, 
should  be  enclosed  with  each  package,  and  a  let- 
ter of  advice  sent  by  mail.  All  express  packages 
should  be  sent  to  the  "  Treasurer  of  the  United 
States,  Washington,  D.  C,"  and  should  have  the 
wrapper  plainly  marked  with  the  bank's  name 
and    address.      Such   packages   should    be  sent 


Tax  on  Circulation 


"  collect "  under  ' '  Government  contract  with  the 
United  States  Express  Company." 

Banks  taking  out  circulation  are  subjected  to 
a  semi-annual  tax  on  the  average  amount  of  cir- 
culation outstanding.  This  tax  is  payable  semi- 
annually. It  is  at  the  rate  of  1  per  cent,  in  all 
cases  except  where  the  circulation  is  secured  by 
deposits  of  the  2  per  cent.  Consols  of  1930. 
On  circulation  so  secured  the  tax  is  at  the  rate 
of  1^  of  1  per  cent,  per  annum. 

The  Treasurer,  when  levying  this  tax,  takes 
as  a  basis  the  average  amount  of  notes  that  a 
bank  has  had  in  circulation  during  the  six  months 
previous  to  the  assessment  date.  This  estimate 
must  be  made  by  each  bank  and  submitted, 
under  the  oath  of  the  President  or  Cashier, 
within  ten  days  from  the  first  of  January  and 
July. 

If  a  bank  fails  to  make  a  proper  report  on  the 
average  amount  of  circulation  it  has  had  out- 
standing for  a  period  of  six  months,  it  is  liable  to 
a  fine  of  $200,  and  the  tax  which  must  be  paid 
by  such  an  institution  shall  be  assessed  upon  the 
amount  of  notes  that  liave  been  delivered  by  the 
Comptroller,  rather  than  on  the  average  amount 
in  circulation. 

39 


Average  Circulation 


Liability  for  tax  begins  on  the  first  day  of 
January  and  July  in  each  year,  unless  a  bank 
should  not  at  that  time  have  any  circulation  out- 
standing. In  the  latter  case,  it  begins  with  the 
date  of  the  first  issue  of  notes,  and  this  liability 
terminates  on  the  thirtieth  day  of  June  or  the 
thirty-first  day  of  December,  depending  on 
whether  it  will  be  the  first  or  last  six  months  of 
the  year. 

A  bank  can  calculate  the  average  amount  of 
notes  it  has  in  circulation  during  a  period  of  say 
six  months,  by  taking  the  amount  it  has  out- 
standing each  day  for  the  particular  period,  add- 
ing these  amounts  together  and  dividing  by  the 
exact  number  of  days. 

Should  a  bank  not  keep  a  daily  record  of  out- 
standing circulation,  but  obtain  its  averages  from 
weekly  statements,  it  should  pursue  the  same 
course  as  would  a  bank  having  daily  reports.  In- 
stead of  adding  the  amount  of  circulation  out- 
standing each  day,  it  should  add  together  the 
amount  of  circulation  outstanding  each  week, 
and  divide  by  the  number  of  weeks,  instead  of 
the  number  of  days  in  the  period.  If  there  is  any 
fraction  of  a  week,  the  amount  that  should  be 
added   for   each   day  of  such  a  fraction  is  one- 

40 


Computmg  Tax 


seventh  of  the  weekly  balance  immediately  pre- 
ceding the  odd  number  of  days.  Banks  whose 
circulation  is  not  subject  to  a  tax  for  the  entire 
half  year,  if  estimates  are  made  from  daily  bal- 
ances, should  divide  the  total  of  these  balances 
by  the  number  of  days  in  the  half  year,  and 
banks  which  make  their  estimates  from  weekly 
balances  should  divide  the  total  by  the  number 
of  weeks  and  fraction  of  weeks  in  the  half  year. 
The  tax  computed  on  the  result  will  be  at  the 
full  semi-annual  rate. 

A  bank  must  also  take  into  consideration  the 
bonds  that  have  been  deposited  with  the  Comp- 
troller as  security  for  this  circulation,  as  the  tax 
on  2  per  cent.  Consols  of  1930  differs  from  that 
on  the  3  per  cent,  bonds  of  1908,  4  per  cent, 
bonds  of  1907,  and  4  per  cent,  bonds  of  1925.  If 
the  notes  are  secured  by  a  deposit  of  2  per  cent. 
Consols,  J^  of  1  per  cent,  of  the  daily  average  will 
be  the  semi-annual  tax,  and  if  on  the  other  issues, 
J  of  1  per  cent,  for  each  half  year  period. 

The  Treasurer  of  the  United  States,  shortly 
before  the  tax  on  circulation  is  payable,  sends  to 
each  national  bank,  in  duplicate,  the  form  given 
on  page  166.  This  blank  should  be  filled  out  and 
sent  back  to  the  Treasurer  within  the  ten  days 

41 


Depositing  Tax 


following  the  dates  on  which  the  circulation  tax 
is  due.  The  duplicate  form  is  kept  in  the  bank's 
files. 

A  bank  may  pay  the  amount  of  tax  assessed 
on  its  circulating  notes  to  the  Treasurer  of  the 
United  States  or  to  any  Assistant  Treasurer  or 
National  Bank  Depositary.  When  such  a  de- 
posit is  made,  triplicate  certificates  should  be 
issued.  The  original  should  be  immediately  for- 
warded to  the  Secretary  of  the  Treasury,  the  du- 
plicate to  the  Treasurer,  and  the  triplicate  should 
be  held  by  the  bank  as  a  voucher.  This  certifi- 
cate must  state  specifically  that  the  deposit  is 
made  on  account  of  the  semi-annual  circulation 
tax.  Should  there  not  be  a  depositary  conven- 
ient to  a  bank,  it  can  make  payment  by  drafl 
on  New  York,  which  must,  however,  be  collec- 
tible through  the  Clearing  House.  This  should 
be  to  the  order  of  the  Treasurer.  It  can  also 
make  in  "  lawful  money'of  the  United  States  or 
notes  of  national  banks  a  direct  remittance  to  the 
Treasurer. 

Whenever  the  outstanding  circulation  of  a 
bank  is  reduced  to  5  per  cent.,  or  under,  of  its 
capital  existing  at  the  time,  such  circulation 
shall  be  free  from  taxation,  and,  also,  if  a  bank 

42 


State  Bank  Cwculation 


has  ceased  to  issue  notes  for  circulation,  and  has 
deposited  with  the  Treasurer  of  the  United 
States,  in  "  lawful  money,"  the  amount  of  these 
outstanding  notes,  such  circulation  shall  be  ex- 
empt from  taxation. 

Every  bank  other  than  a  national  bank  that 
issues  circulation  must  pay  to  the  Government 
annually  a  tax  of  10  per  cent,  on  the  amount  of 
notes  issued. 

United  States  bonds  are  not  taxable  by  any 
State  or  municipal  authority.  The  notes  of  a 
national  bank  in  the  hands  of  an  individual  or 
corporation  are  taxable  as  money  on  hand,  but 
the  bank  is  not  subject  to  State  taxation  upon 
such  notes  as  circulation. 

Should  any  bank  believe  the  tax  levied  by  the 
Treasurer  to  be  excessive,  such  an  institution 
must  make  a  statement  of  account  to  the  Treas- 
urer, which,  if  certified  by  him  to  be  correct, 
will  result  in  the  excess  tax  being  refunded. 

Any  bank  desiring  to  withdraw  all  of  its  circu- 
lation, or  a  part  of  it,  can  do  so  by  depositing 
with  the  Treasurer  of  the  United  States  "  law- 
ful money  "  to  an  amount  equal  to  the  notes  it 
wishes  to  retire.  Upon  the  proper  deposit  of 
"  lawful  money "  by  a  bank,  the  Treasurer  will 

43 


Withdrawing  Circulation 


re-assign  the  bonds  he  is  holding  in  trust  for 
such  an  institution  to  the  bank  withdrawing 
circulation,  and  will  immediately  destroy  the 
redeemed  circulation.  No  bank,  of  course,  may 
reduce  its  deposit  of  bonds  with  the  Treasurer 
below  the  limit  of  its  Charter  bonds,  unless 
it  is  going  out  of  business.  Any  bank  which 
desires  to  withdraw  all  of  its  circulation  will  be 
assessed,  when  making  its  deposit  of  "lawful 
money  "  to  redeem  such  circulation,  the  cost  of 
transporting  and  redeeming  its  notes.  The  as- 
sessment will  be  equal  to  the  average  cost  of 
the  redemption  of  national  bank  notes  during 
the  preceding  year. 

The  withdrawal  of  circulation  is  limited  by  the 
National  Bank  Act  to  $3,000,000  per  month. 

Before  a  bank  makes  arrangements  to  sell 
bonds  and  reduce  its  circulation,  it  should  find 
out  how  far  in  advance  the  limit  has  been 
reached.  Sometimes  applications  for  reduction 
of  circulation  will  equal  the  limit  several  months 
in  advance,  and  a  bank  desiring  to  take  advan- 
tage of  a  high  price  for  its  bonds  is  unable  to 
retire  its  notes  and  reduce  circulation  until  its 
application  can  be  filed  for  some  month  in  which 
the  limit  has  not  been  reached. 

4,4 


Examhi'mg  Bonds 


A  bank  must,  once  each  fiscal  year,  have  an 
agent  examine  and  compare  the  bonds  that  it 
has  deposited  with  the  Treasurer  of  the  United 
States  with  the  books  of  the  Comptroller  of  the 
Currency  and  with  its  own  accounts.  If  they 
are  found  correct,  it  must  give  to  the  Treasurer 
a  certificate  in  the  form  found  on  page  168,  which 
sets  forth  the  different  kinds  of  bonds  that  it  had 
on  deposit  and  their  amount. 

Through  the  Riggs  National  Bank,  its  repre- 
sentative in  Washington,  the  National  City  Bank 
is  prepared  to  undertake  this  examination  in  be- 
half of  its  correspondents  and  will  make  no 
charge  therefor. 


V 


45 


PROFITS     ON     CIRCULA- 
TION 

r 

THE  profit  which  a  national  bank  makes 
in  taking  out  circulation  is  determined 
mainly  by  two  factors — the  price  at 
which  it  can  purchase  Government  bonds  and 
the  average  rate  of  interest  in  the  money  market. 
As  all  issues  of  Government  bonds  sell  above 
par,  and  as  a  bank  receives  in  circulation  an 
amount  equal  only  to  the  par  value  of  the  bonds 
deposited,  it  is  evident  that  it  must  pay  out  for 
the  Government  bonds  which  it  deposits  to  se- 
cure circulation,  more  money  than  it  receives  in 
circulating  notes  from  the  Comptroller.  The 
profit  in  the  transaction  lies  in  the  fact  that  a  bank 
can  pay  out  the  circulating  notes,  and  that  it 
also  receives  interest  upon  the  Government 
bonds.  That  profit  is  reduced,  however,  by  the 
fact  that  the  outstanding  circulating  notes  are 
taxed  by  the  Government,  that  there  are  certain 
expenses  attached  to  their  printing,  issue,  and 
redemption,  and  that,  as  the  bank  purchases  at  a 

46 


Sinking  Fund 


premium  bonds  which  will  in  due  course  be  re- 
deemed by  the  Government  at  par,  the  bank 
must  set  aside  a  sinking  fund  which  will,  by  the 
time  the  bonds  mature,  absorb  the  premium. 
Remarks  upon  the  nature  of  this  sinking  fund, 
which  will  be  found  in  the  discussion  of  profits 
on  Government  deposits,  will  apply  with  equal 
force  in  a  consideration  of  the  profits  upon  na- 
tional bank  circulation  and  are  not,  therefore, 
repeated  here. 

Owing  to  the  fact  that  the  bank  must  part 
with  more  money  to  buy  the  bonds  which  it  will 
require  as  a  basis  for  circulation  than  it  will  re- 
ceive back  in  circulating  notes,  its  profits  on  cir- 
culation increase  as  the  average  rate  of  interest 
in  the  money  market  decreases  ;  and  as  average 
money  market  rates  advance,  its  profits  on  circu- 
lation decline.  This  is  caused  from  the  fact  that 
it  could  loan  the  entire  sum  which  it  invests  in 
bonds  at  the  average  money  market  rate,  but  if 
it  takes  out  circulation  it  can  only  loan  an 
amount  equal  to  the  par  value  of  those  bonds 
and  loses  the  interest  on  the  premium.  That  is 
compensated  for  by  the  fact  that  the  bank  re- 
ceives interest  on  the  bonds,  but  its  profits  are 
lessened,  nevertheless,  by  the  fact  that  no  inter- 

47 


Typical  Illustration 


est  is  earned  on  the  premium  which  the  bonds 
cost,  and,  therefore,  the  higher  the  market  rate  for 
rhoney,  the  smaller  the  profit  on  circulation. 

In  calculating  the  profits  on  circulation,  ac- 
count should  betaken  of  the  net  cost  of  the  bonds 
purchased.  Dealing  in  Government  bonds  is, 
unless  otherwise  provided  in  the  contract,  uni- 
formly at  a  flat  price  ;  that  is  to  say,  if  3's  of 
1908-18  were  purchased  December  1st  at 
107^,  the  purchaser  would  have  to  pay  $1,075 
for  each  $1,000  bond,  but  there  would  have  ac- 
crued interest  from  November  1st  to  December 
1st,  which  should  be  deducted  in  arriving  at  the 
net  price  paid,  because  the  whole  quarter's  inter- 
est, covering  November,  December,  and  January, 
would  go  to  the  purchaser  who  held  the  bonds 
when  the  transfer  books  closed  December  31, 
1903. 

To  make  a  typical  illustration  of  the  way  in 
which  are  computed  profits  on  circulation,  we 
have  assumed  a  purchase  of  $100,000  United 
States  2  per  cent,  bonds  of  1930,  bought  Decem- 
ber 1, 1903,  at  106.  There  would  have  accrued 
the  interest  for  October  and  November,  and 
the  net  cost  of  the  bonds,  therefore,  December 
1st,  was  $105,668.     If  we  assume  the  average 

48 


Net  Profit  on  Ciixulation 


rate  in  the  money  market  is  5  per  cent.,  the 
profits  on  circulation  will  be  reached  in  this  way : 
The  bank  will  receive  the  interest  on  the  bonds, 
amounting  to  $2,000  annually,  and,  assuming 
that  it  keeps  out  all  the  circulation,  in  a  5  per 
cent,  money  market,  it  will  receive  $5,000  inter- 
est on  circulation,  making  gross  receipts  of  $7,000. 
As  the  circulation  in  this  case  is  taken  out  on  2 
per  cent,  bonds,  the  tax  would  be  one-half  of 
1  per  cent.,  or,  on  $100,000,  $500.  The  average 
expense  of  redemption,  express  charges,  etc.,  is 
estimated  by  the  Government  Actuary  at  about 
$63  on  each  $100,000  of  circulation.  The  amount 
which  will  have  to  be  set  aside  annually  for  the 
sinking  fund  in  this  case  is  $105,  making  the 
sum  of  the  deductions  $668.  If  this  amount  is 
subtracted  from  the  gross  receipts  of  $7,000,  the 
net  receipts  are  found  to  be  $6,332.  Had  the 
cost  of  the  bonds  been  loaned  at  the  market  rate 
of  interest,  the  bank  would  have  received  $5,283 
per  annum.  The  net  profit  in  taking  out  circu- 
lation amounts,  therefore,  to  the  net  receipts  as 
stated  above,  less  the  amount  which  would  have 
been  derived  by  loaning  the  money  direct  at  5 
per  cent.  This  difference  is  $1,04-9,  which  is  .99 
of  1  per  cent,  of  the  cost  of  the  bonds ;  that  is  to 

49 


MetJiod  of  Calculating 


say,  in  a  5  per  cent,  money  market,  a  bank  tak- 
ing out  circulation  December  1,  1903,  based 
upon  a  purchase  of  bonds  at  106  flat,  would 
make  annually  5.99  per  cent,  on  the  investment, 
where  it  would  have  received  but  5  per  cent, 
had  it  loaned  the  money  direct. 

This  calculation  shows  the  profits  to  be  ob- 
tained by  taking  out  $100,000  of  circulation. 
On  a  less  sum,  the  amount  of  profit  would  be 
proportionate,  but  the  percentage  of  profit  would 
remain  the  same. 

The  following  is  a  calculation  showing  the 
profits  to  be  derived  from  the  issuance  of  cir- 
culation in  accordance  with  the  example  given. 

Receipts  : 

Interest  on  bonds $2,000 

Interest  on  circulation 5,000 

Gross  receipts $7,000 

Deductions : 

Tax $500 

Expenses 63 

Sinking  Fund 105         668 

Net  Receipts $6,332 

Interest  on  cost  of  bonds 5,283 

Profit  on  circulation  in  excess  of  5  per  cent,  on 

the  investment $1,049 

Percentage  of  profit  in  excess  of  5  per  cent 99 

50 


Advantage  to  Banks 


The  increased  income,  however,  is  not  all  that 
a  bank  gains  by  distributing  its  notes  throughout 
the  community  in  which  it  is  situated.  The 
currency  once  disseminated  becomes  a  dignified 
and  an  effective  advertisement  of  the  bank, 
although  that  perhaps  is  not  of  great  practical 
importance. 


51 


BANK  RESERVES 


A  BANK  must  at  all  times  have  on  hand, 
or  immediately  available,  funds  which 
will,  in  the  usual  course  of  business,  be 
sufficient  to  meet  the  ordinary  daily  demand 
from  its  depositors.  The  National  Bank  Act, 
having  in  view  these  daily  payments,  has  pro- 
vided that  a  national  bank  must  retain  a  certain 
portion  of  its  funds  in  an  available  form  and  this 
is  known  as  "Reserve." 

The  legal  reserve  of  a  national  bank  is  made 
up  of  cash  in  its  vaults,  the  5  per  cent,  fund  de- 
posited with  the  Treasurer  of  the  United  States 
to  redeem  its  circulating  notes,  and,  with  certain 
limitations  and  exceptions,  bank  credits  with 
regularly  designated  Reserve  Agents.  The 
funds  in  the  vault  of  a  bank  which  may  count 
in  its  legal  reserve  consist  of  the  following  ; 

Gold  coin. 
Silver  coin, 
Minor  coin, 
Gold  certificates, 
52 


Legal  Reserve  Money 


Silver  certificates, 
Clearing  House  certificates. 
United  States  notes, 
Treasury  notes. 

In  those  cities  where  there  is  a  clearing  house 
which  has  prov^ided  a  central  vault  for  the  use  of 
members,  a  bank  may  deposit  coin  and  legal 
tenders  and  receive  from  the  Association  "  Clear- 
ing House  Certificates,"  representing  the  gold  so 
deposited.  These  certificates  are  issued  in  a  form 
to  pass  only  from  one  bank  to  another  in  pay- 
ment of  clearing  debit  balances.  Sucli  "  Clear- 
ing House  Certificates  "  may  be  counted  in  the 
reserve. 

So-called  "  Clearing  House  Certificates  "  some- 
times issued  in  times  of  monetary  stringency  by 
a  clearing  house  association  accepting  bank  col- 
lateral, and  issuing  "  Clearing  House  Certifi- 
cates "  against  such  collateral,  do  not,  of  course, 
come  within  this  meaning,  and  may  not  be 
counted  in  the  reserve. 

The  amount  of  reserve  that  a  bank  must  keep 
in  compliance  with  the  National  15ank  Act  is  a 
fixed  percentage  of  its  net  deposits.  The  first 
step,  therefore,  in  calculating  the  legal  reserve 
of  a  national  bank  is  to  find  exactly  what  are 

53 


Net  Deposits 


Net  Deposits  according  to  the  regulations  of  the 
office  of  the  Comptroller  of  the  Currency. 

A  bank,  in  order  to  find  its  net  deposits,  must 
first  get  the  total  of  its  gross  deposits.  There 
are  numerous  items  which  go  to  make  up  these 
gross  deposits,  and  they  are  set  forth  in  the  fol- 
lowing typical  bank  statement,  which  contains 
all  items  that  are  likely  to  be  found  in  the  usual 
bank  report.  The  gross  deposits  can  be  ascer- 
tained by  adding  together  all  the  items  which 
are  found  distinguished  by  heavy  type  on  the 
"  LIABILITY  "  side  of  the  statement.  After 
this  total  is  ascertained,  the  items  found  simi- 
larly distinguished  on  the  "  RESOURCE  "  side 
of  the  statement  must  be  deducted,  and  the  re- 
sult obtained  is  the  net  deposits,  which  form  the 
basis  on  which  the  reserve  is  figured. 


Resources. 

Loans  and  Discounts 

Overdrafts 

U.  S.  Bonds  to  secure  Circu- 
lation    

U.  S.  Bonds  to  secure  U.  S. 
Deposits 

Other  Bonds  to  secure  U.  S. 
Deposits 


Liabilities. 

Capital  Stock  paid  in 

Surplus  Fund 

Undivided  Profits,  less  Ex- 
penses and  Taxes 

National-bank  notes  outstand- 
ing   

Due  to  Other  National 
Banks 


54 


Gross  Deposits 


U.  S.  Bonds  on  hand 

Premium  on  U.  S.  Bonds .... 

Bonds,  Securities,  etc 

Banking     House,      Furniture 

and  Fixtures 

Other  Real  Estate  owned  .  .  . 
Due  from  National  Banks .  . 
I>ue  from  State  Banks  and 

Bankers 

Due  from    approved    Reserve 

Agents 

Internal-Revenue  Stamps. .  .  . 
Checks    and     Other     Cash 

Items 

Exchanges      for      Clearing 

House 

Bills     of     Other     National 

Banks 

Fractional    Currency,   Nickels 

and  Cents 

Specie 

Legal-tender  Notes 

Five    per    cent.    Redemption 

Fund 

Due  from  U.  S.  Treasurer . . 

U.  S.  Bond  Account 

Total 


Due  to  State  Banks  and 
Bankers 

Due  to  Trust  Companies 
and  Savings  Banks. .  .  . 

Due  to  approved  Reserve 
Agents 

Dividends  Unpaid 

Individual  Deposits 

U.  S.  Deposits 

Deposits  of  U.  S.  Disbursing 
Officers  

Bonds  borrowed 

Notes  and  Bills  rediscounted . 

Bills  payable 

Demand  Certificates  of  De- 
posits   

Tax   Reserve 

Special  Deposits 

Certified  Checks 

Cashier's  Checks  Outstand- 
ing  

U.  S.  Bond  Account 

Liabilities  other  than  those 
above  

Total 


According  to  the  practice  of  the  Comptroller's 
office,  ii  bank   need  only  keep  reserve  on   the 

55 


Computing  Reserve 


amount  of  bank  deposits  that  it  has  in  excess  of 
the  amount  due  from  other  banks.  Therefore, 
the  amount  "  due  from  banks  "  should  be  sub- 
tracted from  the  amount  "  due  to  banks  "  if  the 
latter  amount  is  in  excess,  and  the  result  added 
to  the  total  of  net  deposits  that  are  secured.  If 
a  bank's  bank  deposits  are  not  as  large  as  the 
amount  it  has  coming  from  banks,  both  the 
items  "  due  to  banks "  and  "  due  from  banks " 
are  omitted  entirely  from  the  computation. 

On  pages  169  and  170  will  be  found  repro- 
duced the  forms  which  the  Comptroller  of  the 
Currency  furnishes  to  banks  for  the  purpose  of 
computing  their  reserve.  The  first  statement  is 
the  proper  form  for  banks  located  in  Central  Re- 
serve Cities  and  in  Reserve  Cities;  the  second 
statement  is  the  proper  form  for  banks  located 
elsewhere  than  in  Central  Reserve  and  Reserve 
Cities.  These  statements  are  arranged  in  such  a 
manner  and  in  such  detail  that  a  careful  study  of 
them  in  connection  with  this  chapter  ought  to 
make  the  method  of  calculating  reserve  perfectly 
clear. 

The  proportion  of  net  deposits  that  banks 
must  keep  as  a  reserve  fund  varies  and  the 
amount  is  dependent  on  whether  a  bank  is  situ- 

56 


Reserve  Banks 


ated  in  a  Central  Reserve  City,  Reserve  City,  or 
u^hat  might  be  conveniently  classified  as  an 
Undesignated  City. 

Banks  have  been  divided  into  these  three 
classes — Central  Reserve  Banks  or  banks  in 
Central  Reserve  Cities  ;  Reserve  Banks  or  banks 
in  Reserve  Cities  ;  and  Country  Banks,  or  banks 
in  Undesignated  Cities. 

Central  Reserve  Banks  must  keep  a  reserve 
of  25  per  cent,  of  their  net  deposits,  and  must 
keep  this  fund  in  their  own  vaults. 

Reserve  Banks  are  also  obliged  to  keep  a  re- 
serve of  25  per  cent,  of  their  net  deposits,  but 
they  have  the  privilege  of  depositing  one-half  of 
this  25  per  cent,  with  a  bank  in  a  Central  Reserve 
City  which  has  been  approved  by  the  Comp- 
troller of  the  Currency  as  their  reserve  agent. 
The  other  half  must  be  kept  in  their  own  vaults. 

Country  Banks  need  only  maintain  a  reserve 
of  15  per  cent,  of  their  net  deposits,  and  of  this 
amount  they  need  only  keep  two-fiftlis  in  their 
own  vaults.  The  remainder  may  be  placed  with 
a  bank  in  a  Central  Reserve  City  or  in  a  Reserve 
City  under  the  conditions  of  approval  above 
stated. 

Under  these  regulations,   a  Central    Reserve 

6T 


Reserve  Agents 


Bank,  while  being  unable  to  get  interest  on  any 
portion  of  its  reserve  fund,  is  in  a  position  to 
secure  the  reserve  funds  of  banks  in  Reserve 
Cities  and  Undesignated  Cities.  Banks  in  Re- 
serve Cities,  being  restricted  more  than  banks  in 
Central  Reserve  Cities  in  the  matter  of  holding 
reserve  funds,  are  allowed  to  keep  a  portion  of 
their  own  reserve  at  interest  with  a  Central 
Reserve  Bank.  Country  Banks,  not  being  al- 
lowed to  hold  the  reserve  of  any  other  banks, 
need  only  keep  a  small  portion  of  their  own  re- 
serve in  their  vaults. 

Central  Reserve  Cities  are  cities  having  a 
population  of  at  least  200,000.  They  are  not 
designated  by  the  Comptroller  of  the  Currency, 
on  his  own  motion.  Any  city,  having  the  re- 
quired number  of  inhabitants,  may  be  designated 
a  Central  Reserve  City  if  three-fourths  of  the  na- 
tional banks  located  therein  make  application 
therefor.  Central  Reserve  Cities  are  so  named 
because  the  banks  in  such  a  place  can  be  selected 
as  Reserve  Agents  by  any  bank  in  the  United 
States,  barring  those  in  other  Central  Reserve 
Cities.  That  is,  banks  in  Reserve  Cities,  and  in 
Undesignated  Cities,  can  deposit  a  certain  pro- 
portion of  their  Reserve  with  banks  in  a  Cen- 

58 


Central  Reserve  Cities 


tral  Reserve  City.  The  banks  in  a  Central  Re- 
serve City  cannot,  on  their  part,  deposit  any  of 
their  reserve  with  other  banks,  but  must  keep  it 
all  in  their  own  vaults.     The  reserve  required 

for  such  banks  is  25  per  cent. 

The  Central  Reserve  Cities  are  as  follows : 

Chicago 
New  York 
St.  Louis 

Reserve  Cities  must  be  cities  having  at  least 
25,000  population.  They  are  designated  in  the 
same  manner  as  Central  Reserve  Cities,  upon 
application  of  three- fourths  of  the  national  banks 
located  therein.  Banks  in  a  Reserve  City  may  be 
selected  by  banks  in  Undesignated  places  as  Re- 
serve Agents.  They  must  keep  a  reserve  of  25 
per  cent.,  and  of  this  amount  one-half  may  be 
deposited  with  some  correspondent  in  a  Central 
Reserve  City. 

On  April  1st,  1904,  the  Reserve  Cities  were 
as  follows: 


Albany 

Cedar  Rapids 

Baltimore 

Cincinnati 

Brooklyn 

Cleveland 

Boston 

Columbus 

69 


Reserve  Cities 


Dallas  Minneapolis 

Denver  New  Orleans 

Des  Moines  Omaha 

Deti-oit  Philadelphia 

Dubuque  Pittsburg 

Fort  Worth  Portland 

Houston  St.  Joseph 

Indianapolis  St.  Paul 

Kansas  City,  Kan.  Salt  Lake  City 

Kansas  City,  Mo.  San  Francisco 

Lincoln  Savannah 

Los  Angeles  Washington 

Louisville  Wichita 
Milwaukee 

Undesignated  Cities,  a  convenient  term  for 
grouping  all  smaller  banks,  include  all  banks  not 
in  a  Central  Reserve  or  Reserve  City.  Banks  in 
this  class  may  not  become  reserve  agents  for  any 
other  banks.  They  need  to  keep  only  a  15  per 
cent,  reserve,  however,  and  of  this  15  per  cent, 
three-fifths  may  be  placed  with  banks  in  either 
Central  Reserve  or  Reserve  Cities. 

A  Reserve  Agent  is  a  bank  that  has  been  se- 
lected by  another  bank  to  hold  a  part  of  its  re- 
serves. Any  national  bank  in  a  Central  Reserve 
City  may  be  selected  as  Reserve  Agent  by  banks 
in  Reserve  and  Undesignated  Cities,  and  any 
bank  in  a  Reserve   City  by  banks  in   Undesig- 

60 


Replenishing  Reserves 


nated  Cities.  Such  agents,  when  they  are  se- 
lected by  a  bank,  must  meet  with  the  approval 
of  the  Comptroller  of  the  Currency, 

A  bank  desiring  to  have  a  Reserve  Agent  ap- 
pointed, makes  an  application  by  letter  to  the 
Comptroller  of  the  Currency.  No  particular 
form  of  letter  is  required  for  this  application, 
and  if  the  bank  which  it  is  proposed  to  make  a 
Reserve  Agent  is  in  good  standing,  the  applica- 
tion will  be  promptly  approved. 

When  the  reserve  of  a  bank  falls  below  the 
amount  specified  by  law,  such  a  bank  must  not 
further  increase  its  liabilities  in  any  manner,  ex- 
cept that  it  may  continue  to  purchase  bills  of 
exchange  payable  at  sight.  The  bank  must  also 
stop  paying  dividends  until  the  reserve  is  made 
good.  After  a  bank  has  been  notified  by  the 
Comptroller  of  the  Currency  that  its  reserve  is 
below  the  legal  limit,  it  must  within  thirty  days 
from  that  time  replenish  such  reserve,  or  the 
Comptroller  may,  with  the  concurrence  of  the 
Secretary  of  the  Treasury,  appoint  a  receiver  to 
wind  up  its  affairs.  Any  action  on  the  part  of 
the  Comptroller  in  such  a  matter  is  discretionary 
and  not  mandatory. 


61 


GOVERNMENT    DEPOSI- 
TARIES 

r 

THE  Government  has  utilized  banks  in  its 
fiscal  operations  ever  since  the  Revolu- 
tionary War.  Robert  Morris,  who  car- 
ried on  the  financial  operations  of  the  colonies  at 
that  time,  accomplished  his  object  by  operating 
largely  through  banks  which  he  organized  for  the 
purpose.  During  the  period  of  the  Revolution 
and  up  to  1809,  no  regulations  were  in  force  re- 
garding the  disposition  of  the  public  revenues. 
Public  moneys  were  placed  in  any  bank  or 
banks  that  the  Treasury  officials  saw  fit  to  desig- 
nate. From  1789  to  1791  the  Bank  of  North 
America  in  Pennsylvania  M^as  the  principal  de- 
positary for  public  revenues.  After  1791  the 
United  States  Bank  was  voluntarily  included  by 
the  Treasury  Department  as  a  depositary  institu- 
tion. The  Act  of  March  3,  1809,  was  the  first 
specific  enactment  concerning  the  disposition  of 
public  money.  This  law  made  it  incumbent  on 
the  Treasury  officials  to  place  public  moneys  in 

62 


History  of  Depositaries 


the  hands  of  disbursing  officers  in  some  duly  in- 
corporated bank  to  be  named  by  the  President. 
The  regulation  had  no  bearing  on  the  accounts 
of  collecting  officers.  In  1816,  upon  the  renewal 
of  the  charter  of  the  United  States  Bank,  it  was 
provided  in  the  charter  that  public  moneys 
should  be  placed  in  that  institution  or  its 
branches.  This  regulation  remained  in  force  un- 
til President  Jackson's  term.  He  was  opposed 
to  the  concentration  of  deposits  in  one  bank  and 
proceeded  to  distribute  them  among  the  various 
State  institutions.  The  sudden  augmenting  of 
deposits  in  the  various  State  banks  induced  an 
undue  expansion  of  credit  and  speculation,  so 
that  in  1837,  when  the  Government  was  forced 
to  withdraw  some  of  these  deposits,  a  distressing 
panic  ensued.  President  Van  Buren  then  recom- 
mended the  Independent  Treasury  system  and 
the  Independent  Treasury  law  was  passed  July 
4, 1840.  It  remained  in  force  only  until  August 
13,  1841.  On  August  16,  1846,  a  new  Independ- 
ent Treasury  law  was  enacted  and  has  remained 
in  force  until  the  present  day.  Public  funds  in 
banks  were  then  withdrawn,  and  from  1847  to 
1864  no  Government  account  was  kept  with 
banks. 

63 


Public  Depositaries 


In  the  year  1864,  the  National  Bank  Act  was 
passed.  This  Act  provided  that  "  all  national 
banks  designated  for  that  purpose  by  the  Secre- 
tary of  the  Treasury  shall  be  depositaries  of  public 
money  except  from  customs." 

The  making  of  an  exception  in  the  case  of  the 
customs  receipts  was  due  to  the  premium  that 
existed  on  gold  during  the  Civil  War  period. 
The  Government  was  required  to  pay  interest  on 
the  public  debt  in  gold,  and  was  thus  forced  to 
bring  into  the  Treasury  all  the  revenues  payable 
in  coin. 

There  are  now  three  classes  of  depositary 
banks : 

Permanent  or  Regular  Depositaries. 

Temporary  Depositaries. 

Special  Depositaries. 

Permanent  Depositaries,  as  the  name  indi- 
cates are  permanent  in  character.  They  are 
designated  by  the  Secretary  of  the  Treasury  in 
localities  where  the  principal  offices  of  Internal 
Revenue  Collectors  are  located.  The  main  func- 
tion of  such  banks,  in  their  relation  to  the 
Treasury,  is  to  receive  deposits  from  revenue  col- 
lectors. Banks  are  not  appointed  as  Perma- 
nent Depositaries  unless  they  are  situated  in  a 

64 


Permanent  JJeposifaries 


section  of  the  country  where  the  collection  and 
transfer  of  public  revenues  will  be  safe-guarded 
and  facilitated  by  the  machinery  of  a  bank. 
Therefore,  a  bank,  in  order  to  be  designated  a 
Permanent  Depositary,  must  first  of  all  be  in  a 
locality  where  receipts  from  "  Internal  Revenue," 
*'  sales  of  public  lands,"  or  other  sources  than 
customs,  are  continuous  and  large  enough  to 
make  a  depositary  of  some  use  to  the  Govern- 
ment. If  a  bank  is  located  in  such  a  district, 
and  its  officers  wish  to  be  designated  a  Per- 
manent Depositary,  application  should  be  made 
by  letter  to  the  Secretary  of  the  Treasury. 

When  a  bank  is  appointed  a  Permanent  De- 
positary it  is  appointed  to  receive  a  certain 
amount  of  Government  money.  To  secure  such 
funds  it  must  place  with  the  Treasurer  of  the 
United  States  Government  bonds  equal  in  face 
value  to  the  moneys  to  be  deposited.  Such  a 
Government  account  can  be  utilized  by  a  bank 
in  the  same  manner  as  the  deposits  of  indi- 
viduals. 

Government  accounts  with  Permanent  Depos- 
itaries are  active.  Revenue  collectors  deposit 
their  receipts  each  day  with  the  properly  desig- 
nated bank.     If  there  happens  to  be  more  than 

65 


Cefiificate  of  Deposit 


one  Depositary  in  a  place  the  Collector  may 
alternate  his  deposits.  For  a  deposit  by  a  Col- 
lector the  bank  is  required  to  issue  a  certificate 
of  deposit,  usually  in  triplicate.  The  original 
certificate  the  bank  must  send  to  the  Secre- 
tary of  the  Treasury,  the  duplicate,  in  case  of 
internal  revenue  receipts,  to  the  Commissioner  of 
Internal  Revenue,  in  case  of  land  office  receipts 
to  the  Commissioner  of  the  General  Land  Office. 
The  triplicate  the  bank  places  in  its  own  files. 
Such  certificates  of  deposit  must  be  mailed  on 
the  day  the  deposit  is  made.  A  copy  of  the 
*'  certificate  of  deposit "  form  will  be  found  on 
page  171. 

If  a  deposit  is  made  with  a  depositary  bank 
in  excess  of  the  maximum  deposit  for  which  the 
bank  has  been  designated  by  the  Secretary  of 
the  Treasury,  such  excess  must  be  transmitted 
to  the  nearest  sub-treasury  on  the  day  it  is  re- 
ceived. Remittances  must  involve  no  expense 
to  the  Treasury  Department. 

Every  Permanent  Depositary  must  on  stated 
days  render  to  the  Secretary  of  the  Treasury  a 
transcript  of  the  Treasurer's  account,  and  also 
send  a  duplicate  to  the  Treasurer.  A  list  of 
w^eekly  deposits,  showing  the  details  of  the  ag- 

66 


Depositary  Accounts 


gregate  amounts  of  receipts,  should  accompany 
the  transcript  to  the  Secretary  of  the  Treasury. 
A  separate  Hst  should  be  rendered  for  the  de- 
posit of  each  officer,  if  more  than  one  makes 
deposits,  and  for  each  account. 

Miscellaneous  and  incidental  deposits  should 
be  clearly  identified  by  the  name  of  the  depositor, 
and  by  indicating  for  what  account  deposited  ;  if 
a  repayment,  the  bank  should  state  on  what 
account  the  money  repaid  was  originally  ad- 
vanced. 

The  debit  side  of  the  transcript  should  exhibit 
money  paid  by  the  bank,  whether  on  a  Treas- 
urer's letter  of  instruction,  transfer  order,  or 
Treasurer's  warrant,  with  number  of  order,  or 
number  and  character  of  warrant. 

Counter  entries  should  not  be  made  witliout 
instructions  from  the  Secretary  of  the  Treasury 
or  the  Treasurer  of  the  United  States. 

When  counter  entries  are  made  to  correct 
amounts  previously  and  erroneously  placed  to 
credit  or  debit,  it  is  very  important  that  the 
name  of  the  depositor  and  the  date  of  the  orig- 
inal entry  should  be  given;  corrections  should 
never  be  made  by  changing  balances  once 
brought  forward. 

67 


Form  of  Transcript 


All  warrants  must  be  transmitted  to  the 
Treasurer  with  the  account  current  on  which 
they  are  entered  ;  otherwise  such  charges  will  not 
be  allowed. 

Transfers  should  be  charged  when  remittance 
is  made,  without  waiting  for  Certificates  of  De- 
posit, which  can  be  sent  to  the  Treasurer  as  soon 
as  received. 

A  copy  of  the  form  of  "  Transcript,"  and  "List 
of  Deposits,"  will  be  found  on  pages  172  and 
174  respectively.  On  page  178  will  be  found 
a  list  of  dates  on  which  transcripts  must  be 
rendered. 

In  places  where  there  is  a  Government  Depos- 
itary tax-payers  are  saved  the  inconvenience  of 
paying  their  public  dues  in  lawful  money.  The 
Government  does  not  recognize  the  payment  of 
taxes  by  check  and  draft,  but  a  Collector  is  per- 
mitted to  take  them  at  his  own  risk  on  a  bank 
that  is  a  Public  Depositary. 

The  Government  endeavors,  so  far  as  pos- 
sible, to  keep  the  excess  revenues  deposited  with 
a  bank  less  than  the  premium  that  exists  on  the 
bonds  which  it  has  deposited  with  the  Treasurer. 
That  is,  if  a  bank  has  deposited  $100,000  of,  say, 
2  per  cent,  bonds  for  an   account  of  $100,000 

68 


Temporary  Depositaries 


and  the  premium  on  those  bonds  is  approxi- 
mately $6,000,  the  Government  endeavors  to 
keep  the  daily  excess  deposits  within  $6,000.  If 
such  deposits  are  frequently  in  excess  of  the 
premium,  the  Government  will  be  inclined  to  in- 
crease the  account  and  ask  for  the  deposit  of 
additional  funds. 

The  Government  does  not  now  receive  any 
interest  on  money  that  is  placed  in  national 
banks.  There  is  no  law  prohibiting  the  exaction 
of  interest,  but  it  has  not  been  required  since 
the  passage  of  the  National  Bank  Act  in 
1804. 

There  are,  at  the  present  time,  268  regular  or 
permanent  depositaries. 

Temporary  Depositaries  are  depositaries  that 
do  not  receive  current  deposits  directly  from 
public  officers,  but  receive  from  the  Treasurer, 
usually  through  the  medium  of  another  deposi- 
tary bank,  the  amount  of  the  funds  allotted. 
Temporary  depositaries  are  not  selected  to  facili- 
tate the  collection  business  of  the  Government, 
but  for  the  purpose  of  taking  care  of  surplus 
revenues. 

The  first  marked  recognition  of  such  deposi- 
taries occurred  during  the  refunding  operations 

69 


Use  of  Depositaries 


carried  on  in  the  '70's.  In  1879  the  operations 
of  the  Government  incident  to  the  resumption 
of  specie  payment  resulted  in  the  accunmlation 
of  considerable  funds  by  the  Treasury  Depart- 
ment. Secretary  Sherman,  in  order  to  prevent 
a  glut  of  money  in  the  Treasury  Department, 
where  it  could  only  be  paid  out  for  daily  expend- 
itures or  by  an  appropriation  of  Congress,  made 
use  of  temporary  depositaries.  Notable  use  was 
again  made  of  such  agencies  in  1887  and  1888  by 
Secretary  Fairchild.  Since  then,  whenever  the 
receipts  of  the  Government  have  been  largely  in 
excess  of  the  expenditures,  the  Treasury  Depart- 
ment has  created  temporary  depositaries  to  hold 
such  excess  revenues.  Any  Government  money 
placed  with  temporary  depositary  banks  is  avail- 
able for  business  uses. 

The  principle  difference  between  a  permanent 
depositary  and  a  temporary  depositary,  is  that 
the  account  in  a  temporary  depositary  is  in- 
active. The  Secretary  of  the  Treasury  allots  a 
certain  portion  of  Government  funds  to  such  a 
depositary,  and  the  account  remains  stationary, 
subject  only  to  call  by  the  Secretary  of  the 
Treasury.  Money  is  usually  placed  in  tempo- 
rary depositaries   through  the  agency  of  one  of 

70 


Special  Depositaries 


the  regular  depositaries  which  the  Secretary  of 
the  Treasury  utiHzes  as  a  receiving  and  distrib- 
uting agent. 

Temporary  Depositaries  are  not  appointed  be- 
cause of  location.  Whenever  the  surplus  of  the 
Government  warrants  the  creation  of  temporary 
depositaries,  the  Secretary  of  the  Treasury,  as  fJsir 
as  possible,  attempts  to  distribute  such  funds  pro 
rata  among  the  banks  throughout  the  country. 
Any  bank  receiving  a  deposit  must  make  a 
counter-deposit  of  Government  bonds  with  the 
Secretary  of  the  Treasury.  Applications  for 
temporary  depositaries  should  be  made  by  letter 
to  the  Secretary  of  the  Treasury.  Usually  ap- 
plications to  be  designated  a  temporary  deposi- 
tary are  considered  by  the  Secretary  of  the 
Treasury  in  the  order  of  their  receipt,  discrimina- 
tion, of  course,  being  made  in  favor  of  banks  in 
a  section  of  the  country  where  previously  created 
depositaries  are  few  in  comparison. 

Special  Depositaries  are  depositaries  in  whicli 
court  and  post-office  money-order  funds  are  kept. 
Such  depositaries  are  designated  by  the  Secretary 
of  the  Treasury  at  the  request  of  the  Attorney- 
General  or  the  Postmaster-General,  according  to 
the  character  of  deposit. 

71 


Interest  on  Deposits 


Interest  is  sometimes  paid  by  banks  on  court 
funds  placed  with  them. 

Whenever  Congress  appropriates  money  for 
the  erection  of  a  pubHc  building  or  other  public 
improvement  and  it  becomes  necessary  to  desig- 
nate a  disbursing  officer,  such  disbursing  officer 
must  keep  the  funds  entrusted  to  him  at  the 
nearest  convenient  depositary  or  Sub-treasury. 
Usually  the  disbursing  officer  is  a  Government 
officer  located  in  the  place  or  near  the  place 
where  the  public  improvements  are  being  made 
and  he  keeps  his  account  with  a  regular  deposi- 
tary if  there  is  one.  If  such  a  disbursing  officer 
is  located  at  a  point  where  there  is  a  Sub-treasury, 
he  is  required  to  keep  his  account  at  the  Sub- 
treasury.  Sometimes  the  cashier  of  a  bank  is 
designated  as  a  disbursing  officer  of  the  Govern- 
ment if  no  other  Government  official  happens  to 
be  stationed  at  or  near  the  place  where  an  ac- 
count is  necessary  to  be  kept,  but  a  cashier  so 
appointed  cannot  keep  the  funds  he  is  required 
to  disburse  in  his  own  bank  unless  it  is  a  public 
depositary.  In  places  where  there  is  no  Treas- 
urer or  Assistant  Treasurer  or  bank  depositary, 
the  Secretary  of  the  Treasury  may,  when  he 
deems  it  essential  to  the  public  interest,  specially 

72 


Withdrawal  of  Deposits 


authorize  that  pubHc  money  may  be  kept  in 
some  other  manner  under  such  regulations  as  he 
may  deem  safe  and  effectual  to  facilitate  the 
payment  to  public  creditors. 

The  Secretary  of  the  Treasury  has  construed 
the  section  concerning  the  security  required  for 
Government  deposits  to  include  not  only  Govern- 
ment bonds,  but  other  bonds  tliat  might  in  his 
discretion  furnish  a  suitable  margin  of  safety. 

While  the  National  Bank  Act  requires  reserve 
to  be  carried  on  deposits  of  every  class,  the  Sec- 
retary of  the  Treasury  and  the  Comptroller  of 
the  Currency  are  vested  by  law  with  discretion- 
ary power  in  this  connection,  and,  under  the 
present  ruling  of  these  officials,  this  requirement 
is  not  being  enforced  against  Government  depos- 
its. 

The  withdrawal  of  Government  funds  from 
Temporary  Depositary  banks  can  be  made  by 
the  Secretary  of  the  Treasury  without  any  pre- 
vious notice,  although  the  withdrawal  of  any 
considerable  amount  is  usually  preceded  by 
timely  notice. 


73 


PROFITS     ON      DEPOSITS 

r 

THE  profit  which  can  be  made  on  Govern- 
ment deposits  depends  on  several  ele- 
ments. They  are,  the  average  interest 
rate  in  the  money  market,  the  particular  issue  of 
bonds  which  is  used  to  secure  the  deposit,  and 
the  price  and  net  investment  yield  of  those  bonds. 
Consider  first  the  case  in  which  only  United 
States  Government  bonds  are  deposited  with  the 
Treasury  Department  to  secure  the  deposit  of 
Government  funds.  For  example,  for  every  $100,- 
000  of  United  States  deposits  secured  there  must 
be  deposited  $100,000  par  value  of  United  States 
bonds,  and  as  all  issues  of  Government  securities 
sell  at  a  premium  it  will  be  necessary  for  the 
bank  receiving  a  Government  deposit  to  pay  out 
in  the  purchase  of  bonds  more  than  it  will  receive 
back  in  the  form  of  a  deposit.  There  must  also 
be  taken  into  account  the  fact  that,  while  the 
bonds  are  purchased  at  a  considerable  premium, 
each  year  that  they  are  held  brings  them  nearer 

74 


Sinking'  Fund  Deduction 


to  the  date  of  maturity,  when  they  will  be  worth 
only  their  face  value.  It  is  therefore  necessary 
in  accurately  calculating  the  profits  upon  Govern- 
ment deposits,  to  set  aside  from  each  quarterly 
payment  of  interest  by  the  Government  an 
amount  sufficient,  if  placed  at  interest,  to  offset, 
at  the  maturity  of  the  bonds,  the  premium  which 
was  originally  paid.  That  deduction  is  called 
the  sinking  fund,  and  should  be  calculated  with 
much  care. 

To  arrive  at  that  fund  accurately  a  sum  must 
be  found  which,  if  deducted  from  each  quar- 
terly interest  payment,  and  placed  at  interest 
from  the  various  dates  of  deduction  to  the  matur- 
ity of  the  bonds,  will  amount  at  the  maturity  to 
exactly  the  premium  which  has  been  paid.  In 
the  calculations  which  are  made  in  this  volume 
in  connection  with  typical  forms  showing  both 
the  profits  on  Government  deposits  and  on  nation- 
al bank  note  circulation,  the  formula  used  by  the 
United  States  Government  Actuary  is  followed. 

A  bank  receiving  Government  deposits  must, 
as  has  been  said,  pay  out  for  the  United  States 
bonds  which  it  uses  to  secure  these  deposits,  an 
amount  in  excess  of  the  deposit  received.  On 
the  other  hand  it  receives  the  interest  on   the 

75 


Profits  on  Deposits 


bonds  which  are  held  in  trust  by  the  Treasury 
Department,  and  in  view  of  the  ruhng  of  the 
Secretary  of  the  Treasury  and  the  Comptroller 
of  the  Currency  in  reference  to  reserve  on 
Government  deposits  it  may  properly  calculate 
interest  on  the  total  amount  of  the  Government 
deposit  received.  Its  gross  receipts,  therefore, 
will  be  equal  to  the  interest  on  the  bonds 
placed  with  the  Treasurer,  and  interest  on  the 
full  amount  of  the  deposit  at  the  current  money 
market  rate.  There  must  then  be  deducted  the 
amount  necessary  to  set  aside  in  the  sinking 
fund  to  absorb  the  premium  on  the  bonds  pur- 
chased, and  the  comparison  of  that  net  return 
must  be  made  with  what  would  have  been  re- 
ceived had  the  total  amount  invested  in  the 
bonds  been  loaned  directly  at  the  current  money 
market  rate. 

Suppose, for  example,  a  bank  purchased  United 
States  2  per  cent,  consols,  January  1,  1904,  at 
106.  As  interest  on  the  2  per  cent,  consols  is 
payable  January  1st,  there  would  be  no  accumu- 
lated interest,  so  that  106  would  be  the  net  price. 
A  bank  therefore  on  a  deposit  of  $100,000  would 
have  to  invest  exactly  $106,000.  It  would  in  a 
year  receive  the  interest  on  those  bonds  amount- 

76 


Calculation  of  Profits 


ing  to  $2,000,  and  supposing  the  average  money 
market  rate  to  be  4  per  cent.,  it  could  loan 
out  the  deposit  obtained  from  the  Government 
and  receive  $4,000  interest.  The  total  receipts 
would  therefore  be  $6,000,  but  there  must  be 
deducted  from  that  the  amount  necessary  to 
set  aside  for  the  sinking  fund  to  absorb  the 
premium  on  the  bonds.  If  there  is  set  aside 
each  year  $130,  in  four  equal  amounts,  at  the 
dates  of  the  quarterly  interest  payments,  and 
these  amounts  are  improved  at  4  per  cent,  until 
the  maturity  of  the  bonds  in  1930,  the  total  will 
just  equal  the  $6,000  of  premium  that  the  bank 
has  paid.  Therefore,  if  we  deduct  $130  from  the 
$6,000  of  gross  receipts  we  will  have  net  receipts 
of  $5,870,  which  would  be  the  result  if  a  bank 
obtained  $100,000  of  deposits. 

Now  if  a  bank  had  loaned  $106,000  direct,  it 
would  have  received  $4,240  in  interest.  There 
is,  therefore,  a  net  profit  in  favor  of  a  Govern- 
ment deposit  of  $1,630,  or  1.53  per  cent,  over 
that  which  would  have  been  derived  from  loan- 
ing the  money  direct.  That  is  to  say,  if  the 
bank  could  have  loaned  its  $106,000  at  4  per 
cent,  direct,  it  would  have  made  5.53  per  cent, 
on  the  money  by  obtaining  a  Government  de- 

77 


Typical  Calculation 


posit.  If  the  bank  does  not  take  advantage 
of  the  Comptroller's  permission  to  carry  Govern- 
ment deposits  without  reserve  the  result  will  be 
less  favorable.  A  bank  must  also  take  the  mar- 
ket chance  of  a  decline  in  the  price  of  Govern- 
ment bonds. 

A  typical  calculation  as  above  analyzed  would 
be  as  follows  : 

Profits  on  $100,000  Government  Deposits  secured  by  $100,000 
United  States  2  per  cent.  Consols  purchased  January  1, 
190 Jf.,  at  106,  the  average  Money  Market  Interest  Rate  being 
regarded  as  Jf  per  cent. 

Interest  on  bonds $2,000 .  00 

Interest  on  deposits 4,000 .  00 

Gross  receipts $6,000 .  00 

Deduction  for  sinking  fund 1 30 .  00 

Net  receipts $5,870 .  00 

Interest  on  the  money  invested  in  bonds  if  loaned 

directly  at  4  per  cent 4,240 .  00 

Net  profit  on  deposit $1,630 .  00 

Per  cent 1.53 

This  calculation  varies,  of  course,  with  any  fluc- 
tuation in  price  of  bonds,  with  any  variation  in 
the  average  money  market  rate,  and  with  any 
change  in  the  issue  of  bonds  purchased. 

The  National  City  Bank  will  at  any  time  fur- 

78 


Bonds  Securing  Deposits 


nish  accurate  calculations  based  upon  any  con- 
ditions of  market  price,  money  market  rate  of 
interest,  and  issues  of  bonds  under  which  a  result 
may  be  desired. 

The  Secretary  of  the  Treasury  has  accepted 
deposits  of  certain  bonds  other  than  Government 
issues  as  security  for  public  deposits.  There  are 
various  State,  territorial  and  municipal  issues,  also 
Philippine  certificates  and  District  of  Columbia 
guaranteed  bonds  which  have  been  so  accepted. 
On  these  State  and  territorial  issues  the  Govern- 
ment does  not  deposit  up  to  the  par  value.  Upon 
the  District  of  Columbia  bonds  it  does.  The  cal- 
culation of  profits  upon  deposits  based  on  other 
than  Government  bonds  should  be  made  in  the 
same  manner  as  shown  in  the  typical  illustration, 
and  such  calculations  will  be  furnished  by  the 
National  City  Bank  at  any  time  request  is  made. 
The  deposit  of  other  than  Government  bonds 
has  only  been  permitted  under  special  and  ex- 
ceptional conditions,  and  up  to  the  present  time 
cannot  be  regarded  as  a  regular  practice  of  the 
Treasury  Department.  There  is  legislation  now 
before  Congress  bearing  upon  this  subject.  The 
present  law  is  perhaps  somewhat  obscure,  but 
so  long  as  Congress  has  taken   no  adverse  view 

79 


Advantage  of  Deposits 


of  the  Secretary  of  the  Treasury's  action  in  this 
connection,  it  would  seem  to  have  tacitly  agreed 
to  his  right  to  accept  such  security  for  deposits, 
and  whether  or  not  there  is  any  future  legislation 
on  the  subject,  it  w^ould  seem  probable  that  such 
securities  would  from  time  to  time  be  accepted 
in  lieu  of  Government  issues.  While  the  profits 
on  deposits  when  secured  by  other  than  Gov- 
ernment bonds  are  greater  owing  to  higher  in- 
terest rate  that  such  bonds  bear,  the  bank  may 
be  taking  a  greater  market  risk  of  a  decline  in 
the  price  of  the  bonds  and  the  bank  officers 
should  keep  that  point  in  mind. 

A  consideration  that  cannot  be  accurately 
weighed,  but  which  in  some  cases  is  nevertheless 
of  much  importance  in  deciding  whether  or  not 
a  bank  should  make  efforts  to  obtain  a  public 
deposit,  is  the  effect  that  such  a  deposit  has  upon 
the  mind  of  the  bank's  clients.  A  bank  that  is 
enabled  to  print  "  United  States  Government 
Depositary  *'  on  its  stationery  and  generally  ad- 
vertise the  fact  that  the  Government  has  confi- 
dence in  it,  may,  in  some  communities,  receive 
considerable  advantage  and  that  factor  is  always 
an  element  of  more  or  less  importance  with 
banks  securing  deposits  of  Government  funds, 

80 


OFFICIAL    REPORTS 

r 

THE  Comptroller  of  the  Currency  requires 
from  every  national  bank  at  least  five 
reports  a  year.  There  are  no  specific 
dates  on  which  such  reports  must  be  submitted, 
the  Comptroller  making  calls  whenever  he  deems 
it  proper.  The  Comptroller  can  at  any  time  make 
a  call  on  a  national  bank  for  a  special  report. 

A  bank,  after  it  is  organized,  should  always 
have  on  hand  a  set  of  the  blanks  necessary  to 
make  a  report  of  its  condition.  These  blanks  can 
be  had  upon  apphcation  to  the  Comptroller. 
There  are  two  forms,  one  is  for  detailed  report, 
which  must  be  filled  out  and  sent  to  the  Comp- 
troller, the  other  is  a  condensed  report  which  must 
be  filled  out  and  sent  for  publication  to  the  news- 
paper in  the  place  where  the  bank  is  established, 
or  if  there  be  no  newspaper  in  the  place,  then  in 
the  one  published  in  the  nearest  city  in  the  same 
county. 

After  the  statement  of  a  bank  is  publislied,  it 
must  be  cut  out  from  the  newspaper,  pasted  on 

81 


Publication  of  Report 


the  back  of  the  condensed  report  and  forwarded 
to  the  Comptroller.  The  publisher's  certificate 
must  be  executed.  The  report  that  is  published 
in  the  newspaper  must  be  in  the  same  form  and 
in  the  same  order  of  items  as  the  one  submitted 
to  the  Comptroller,  including  the  full  title  and 
location  of  the  bank,  the  affidavit  of  cashier,  the 
notary's  certificate  and  the  attestation  of  at  least 
three  directors.  If  any  items  are  blank  in  the 
original  statement,  such  items  may,  of  course,  be 
omitted  from  the  printed  report,  but  the  publica- 
tion must  never  be  condensed  by  combining  two 
or  more  items  into  one. 

The  original  report  should  never  be  delayed  on 
account  of  publication.  It  should  be  forwarded 
at  the  earliest  possible  moment  to  the  Comptrol- 
ler and  pubhcation  follow  as  soon  after  as  possi- 
ble. 

The  transmission  of  a  report  must  not  be  de- 
layed more  than  five  days  after  the  call. 

Every  report  made  to  the  Comptroller  of  the 
condition  of  a  bank  must  be  verified  by  the 
oath  of  the  president  or  cashier  of  the  association, 
and  must  be  attested  by  the  signature  of  at  least 
three  of  the  directors.  No  officer  administering 
the  oath  verifying  the  returns  made  by  a  national 

82 


Report  of  Dividend 


bank  to  the  Comptroller  of  the  Currency  shall  be 
an  officer  of  that  bank. 

Every  national  bank  must  report  to  the  Comp- 
troller of  the  Currency  within  ten  days  after  de- 
claring a  dividend,  the  amount  of  such  dividend 
and  the  amount  of  net  earnings  in  excess  of  the 
dividend.  These  reports  must  also  be  attested  by 
the  oath  of  the  president  or  cashier. 

Whenever  a  vote  is  taken  by  a  bank  to  go  into 
liquidation,  the  Board  of  Directors  of  such  a  bank 
must  cause  notice  of  the  vote  to  be  certified  un- 
der the  seal  of  the  association  by  its  president  or 
cashier  to  the  Comptroller  of  the  Currency.  Pub- 
lication of  the  vote  must  also  be  made  for  a  peri- 
od of  two  months  in  a  newspaper  published  in 
the  City  of  New  York  and  also  in  a  newspaper 
published  in  the  city  or  town  in  which  the  asso- 
ciation is  located. 

The  president  or  cashier  of  every  national  bank 
must  have  at  all  times  a  full  and  correct  list  of 
the  names  and  residences  of  all  the  shareholders 
of  the  association  and  the  number  of  shares  held 
by  each.  A  copy  of  this  list  must  be  forwarded 
to  the  Comptroller  of  the  Currency  on  the  first 
Monday  of  July  of  each  year,  the  copy  being  veri- 
fied by  the  oath  of  the  president  or  cashier. 

83 


Report  on  Circulation 


A  bank  must,  on  the  first  day  of  December 
and  the  first  day  of  June  each  year,  make  a  true 
and  complete  return  of  the  monthly  amount  of 
circulation  and  of  the  monthly  amount  of  notes 
of  individual  persons,  of  towns,  city  or  municipal 
corporations,  of  State  banks  or  State  banking 
associations,  that  it  may  have  paid  out  for  the 
previous  six  months.  One  copy  of  such  report 
should  be  transmitted  to  the  Collector  of  In- 
ternal Revenues  of  the  district  in  which  the 
bank  is  situated,  and  one  copy  to  the  Commis- 
sioner of  Internal  Revenues.  Every  bank  must, 
within  ten  days  of  the  first  day  of  January  and 
July,  make  a  return  under  the  oath  of  its  presi- 
dent or  cashier  to  the  Treasurer  of  the  United 
States  of  the  average  amount  of  its  notes  and  cir- 
culation for  the  six  months  next  preceding  the 
most  recent  first  days  of  January  and  July.  A 
form  of  this  statement  is  found  on  page  166. 

Any  association  that  fails  to  make  and  trans- 
mit any  required  report  shall  be  subject  to  a 
penalty  of  $100  for  each  day  after  the  period 
mentioned  that  it  delays  to  make  and  transmit 
this  report.  If  any  association  refuses  to  pay  the 
penalty  after  being  assessed  by  the  Comptroller 
of  the  Currency,  the  amount  of  assessment  may 

84! 


Failure  to  Report 


be  retained  by  the  Treasurer  of  the  United  States 
upon  the  order  of  the  Comptroller  of  the  Cur- 
rency out  of  the  interest  as  it  becomes  due  to  the 
association  on  the  bonds  deposited  with  him  to 
secure  circulation.  An  association  which  fails  to 
make  a  return  of  its  circulation  is  liable  to  a  pen- 
alty of  $200. 


85 


NOTICE     OF     SHARE- 
HOLDERS' MEETING 

r 

UNLESS  the  by-laws  render  it  necessary, 
a  notice  of  an  annual  meeting  of  the 
shareholders  of  a  national  bank  is  not 
required,  if  the  time  and  place  for  such  meeting 
are  stated  in  the  Articles  of  Association,  pro- 
vided the  election  of  directors  is  the  only  busi- 
ness to  take  place. 

For  an  annual  meeting  at  which  business  of 
an  unusual  character  is  to  be  transacted  and  for 
all  special  meetings  of  shareholders,  notice  should 
be  given  as  required  by  the  by-laws  and  Articles 
of  Association  of  the  bank.  It  is  customary  to 
provide  in  those  documents  for  notice  of  such 
meetings.  If  no  provision  is  made,  however,  the 
regulations  of  the  Comptroller's  office  require  a 
thirty  days'  notice  to  be  given. 

The  notice  of  the  meeting  must  accompany 
any    papers    transmitted   to    the    Comptroller. 

86 


Official  Notice 


This  notice  should  give  the  date  of  issue  and 

should  state  clearly- 
First  :  The  place  for  holding  the  meeting. 
Second :  The  time,  specifying  the  hour. 
Third :  The  business  proposed  to  be  transacted. 

(See  page  179  for  form  of  notice.) 


87 


EXTENSION     OF     CORPO- 
RATE   EXISTENCE 

THE  existence  of  a  national  bank  may  be 
extended  for  a  period  of  twenty  years 
from  the  date  of  the  expiration  of  its 
original  charter.  This  date  may  be  ascertained 
from  the  date  of  the  last  acknowledgment  in  the 
Organization  Certificate.  If,  for  any  reason,  that 
date  is  uncertain  or  the  certificate  has  been  lost, 
information  on  this  point  may  be  obtained  from 
the  Comptroller's  office.  Application  for  such 
extension  may  be  filed  with  the  Comptroller  at 
any  time  within  two  years  prior  to  the  expira- 
tion. The  necessary  blanks  and  instructions 
will  be  furnished  a  sufficient  time  in  advance  to 
enable  banks  to  take  advantage  of  this  privilege. 
It  should  be  noticed  in  this  connection,  how- 
ever, that  this  application  must  be  filed  at  least 
two  months  prior  to  the  expiration  of  the  charter. 
Application  for  the  extension  of  the  corporate 
existence  of  a  national  bank  must  be  made  to 
the  Comptroller  of  the  Currency  by  the  presi- 

88 


Executi7ig  Charter 


dent  or  cashier  under  the  conditions  set  forth  in 
the  foregoing  paragraph.  This  appHcation  should 
be  in  the  form  given  on  page  180.  It  must  be 
accompanied  by  an  amendment  to  the  Articles  of 
Association  in  the  form  given  on  page  181.  It 
is  not  necessary  to  hold  a  meeting  of  stockhold- 
ers for  the  purpose  of  securing  their  consent  to 
the  amendment  of  the  Articles  of  Association. 
That  amendment,  however,  must  bear  the  written 
signatures  of  the  holders  of  at  least  two-thirds 
of  the  capital  stock. 

If  it  is  desired  to  have  represented  in  the 
amendment  to  the  Articles  of  Association  shares 
of  stock  standing  in  the  names  of  adminis- 
trators, executors,  trustees,  or  guardians,  certi- 
fied copies  of  the  legal  appointment  of  such  ad- 
ministrators, executors,  trustees,  or  guardians 
should  be  furnished  to  the  bank.  If  stock  held 
by  an  assignee  is  to  be  represented,  the  shares 
must  have  been  regularly  transferred  to  him  on 
the  bank's  books.  If  the  amendment  to  the 
Articles  of  Association  is  signed  by  attorneys 
acting  for  shareholders,  or  by  an  officer  of  any 
corporation,  properly  executed  Powers  of  Attor- 
ney or  other  authority  should  be  required.  These 
Powers  of  Attorney,  however,  should  be  retained 

89 


Certificate  of  Extension 


in  the  files  of  the  bank  and  not  forwarded  to 
the  Comptroller.  (See  pages  182  and  183  for 
forms. ) 

The  execution  of  the  amendment  of  Articles  of 
Association  should  be  certified  to  the  Comp- 
troller of  the  Currency  by  the  president  or  cash- 
ier under  seal  of  the  association.  This  certifica- 
tion should  be  executed  in  duplicate  in  the  form 
presented  on  page  184,  one  copy  to  be  for- 
warded to  the  Comptroller  and  one  to  be  re- 
tained by  the  bank. 

When  the  foregoing  papers  have  been  executed 
in  due  form  and  forwarded  to  the  Comptroller, 
the  remaining  step  necessary  is  a  special  exam- 
ination of  the  condition  of  the  association.  This 
examination  must  be  paid  for  by  the  bank.  If 
the  report  of  the  examiner  is  favorable,  the 
Comptroller  will,  at  the  date  of  the  expiration  of 
the  Charter,  issue  a  Certificate  of  Extension, 
in  the  form  given  on  page  185.* 

It  is  required  by  law  that  the  circulating  notes 
issued  to  a  bank  by  the  Comptroller's  office  after 
the  date  of  the  Certificate  of  Extension  of  cor- 
porate  existence,  shall    be   of   different    design 

*  The  regulations  of  the  Comptroller's  oflBce  require  the  publication 
for  thirty  days  in  a  local  newspaper  of  this  Certificate  of  Extension. 

90 


Issuing  New  Notes 


from  those  issued  under  its  original  charter. 
This  renders  necessary  the  engraving  of  new 
plates,  which  are  prepared  at  the  expense  of  the 
bank.  On  page  186  is  given  a  form  of  order  for 
the  engraving  of  new  plates  and  the  printing  of 
new  circulation.  This  order  should  be  filled  out 
in  a  manner  similar  to  that  provided  for  the 
original  order  of  circulation,  as  explained  in  the 
chapter  on  circulation,  and  should  be  forwarded 
to  the  Comptroller  with  the  application  for  ex- 
tension. 

The  new  notes  are  retained  by  the  office  of  the 
Comptroller  of  the  Currency,  and  as  the  old  issues 
are  received  for  redemption  the  new  issues  are 
substituted.  This  practice  may  continue  until 
the  end  of  three  years  from  the  date  of  extension, 
when  the  law  requires  a  deposit  of  lawful  money 
for  the  redemption  of  such  portion  of  the  old 
circulation  as  may  then  remain  outstanding.  This 
deposit  of  lawful  money  may  be  made  in  full  at 
any  time  prior  to  the  expiration  of  the  three-year 
period  if  it  is  desired  to  provide  at  any  one  time 
for  the  redemption  of  the  old  issues. 

It  is  not  necessary  for  a  bank  extending  its 
corporate  existence  to  make  any  transfer  of 
bonds  held  by  the  Treasurer  in  trust,  as  the  ex- 

91 


Assent  of  Shareholders 


tended  association  is  in  all  respects  the  same  as 
before  extension. 

There  may  be  occasions  when  a  shareholder 
does  not  wish  to  assent  to  the  extension  of  the 
corporate  existence  of  a  national  bank.  In  this 
event  he  may,  within  thirty  days  from  the  date 
of  the  Comptroller's  Certificate  of  Approval  of 
Extension,  give  notice  in  writing  to  the  direc- 
tors of  his  desire  to  withdraw  from  the  associ- 
ation. He  will  then  be  entitled  to  receive  from 
the  bank  the  value  of  the  shares  held  by  him. 
This  value  is  to  be  ascertained  by  an  appraisal 
made  by  a  committee  of  three  persons,  one  to  be 
selected  by  the  shareholder,  one  by  the  Direc- 
tors, and  the  third  by  the  two  persons  so  chosen. 
If  the  value  fixed  by  this  committee  is  not  sat- 
isfactory to  the  shareholder,  he  may  appeal  to 
the  Comptroller  of  the  Currency.  The  Comp- 
troller must  then  cause  a  reappraisal  to  be  made. 
This  reappraisal  shall  be  final  and  binding.  If 
the  reappraisal  exceeds  the  value  fixed  by  the 
committee,  the  expenses  of  the  reappraisal  must 
be  paid  by  the  bank,  otherwise  the  shareholder 
appealing  to  the  Comptroller  must  pay  the  ex- 
pense connected  with  the  transaction.  The 
value  ascertained  and  determined  in  the  manner 

92 


Sale  of  Shares 


set  forth,  must  be  paid  to  the  shareholder  by  the 
bank.  The  shares  thus  surrendered  must  be 
sold  at  public  sale  after  due  notice  within  thirty 
days  after  the  final  appraisal  referred  to. 


93 


RE-EXTENSION   OF    COR- 
PORATE   EXISTENCE 


THE  existence  of  a  national  bank  may,  if 
desired,  be  re-extended  for  a  further 
period  of  twenty  years  from  the  date  of 
expiration  of  the  original  extension  of  charter. 
If  it  is  desired  to  do  this,  an  amendment  of  the 
Articles  of  Association  should  be  executed  and 
forwarded  to  the  Comptroller,  together  with 
a  letter  similar  to  that  given  on  page  180.  This 
amendment  of  the  Articles  of  Association  must 
be  certified  to  the  Comptroller. 

The  amendment  of  Articles  of  Association  and 
the  certificate  to  the  Comptroller  are  similar  to 
the  forms  presented  on  pages  181  and  184  with 
the  exception  that  following  the  words  "  ap- 
proved July  12,  1882,"  should  appear  the  phrase 
"and  the  amendment  approved  April  12,  1902." 
In  accordance  with  the  last  paragraph  of  the 
certificate  to  the  Comptroller,  it  is  assumed  that 
when    shareholders    representing    the    requisite 

94 


Re-extending  Charter 


number  of  shares  of  stock  hav^e  consented  in 
writing  to  the  extension  of  the  charter,  the 
Board  of  Directors  will  adopt  a  resolution,  in  a 
form  to  be  determined  by  them,  to  be  incor- 
porated in  the  minute  book  of  the  bank.  It 
should  be  noted  in  this  connection  that  the 
resolution  of  the  directors  and  the  recording  of 
the  amendment  must  be  of  the  same  date  as  or 
later  date  than  that  of  the  signature  of  the  last 
shareholder  signing  the  paper. 

Such  other  forms  as  are  necessary  in  con- 
nection with  the  re-extension  of  corporate  exist- 
ence are  similar  to  those  used  in  the  proceedings 
for  the  original  extension  with  the  exception  of 
the  Certificate  Re- Extending  Charter,  which  is 
given  on  page  187.* 

A  bank  re-extending  its  corporate  existence 
is  subject  to  the  same  regulations  with  regard  to 
the  change  of  design  of  its  circulating  notes  as  is 
a  bank  extending  its  corporate  existence  for  the 
first  time.  An  explanation  of  these  regulations 
will  be  found  under  the  chapter  on  Extension  of 
Corporate  Existence  on  page  91. 

*The  regulations  of  the  Comptroller's  oflRce  require  the  publica- 
tion for  thirty  days  in  a  local  newspaper  of  this  certificate  of  re- 
extension. 


95 


CHANGES  IN  CAPITAL 

STOCK 

r 

A  NATIONAL  banking  association  may  at 
any  time  increase  its  capital  stock,  but 
before  taking  any  steps  to  this  end  it 
should  first  advise  the  Comptroller  and  secure 
his  approval  of  the  proposed  action.  The  Comp- 
troller will  then  furnish  the  necessary  blanks  and 
instructions  for  procedure.  A  meeting  of  share- 
holders must  then  be  called.  A  form  of  the  notice 
for  this  purpose  is  given  on  page  179. 

If  the  approval  of  the  holders  of  two-thirds  of 
the  stock  is  given  to  the  proposed  increase,  the 
President  or  Cashier  of  the  bank  must  certify 
to  the  Comptroller  the  adoption  of  a  '  Resolu- 
tion to  increase  the  Capital  Stock "  as  given  on 
page  188. 

The  whole  amount  of  the  contemplated  in- 
crease must  be  paid  in  cash,  and  no  increase  is 
valid  until  this  entire  amount  is  paid  and  the 
Comptroller  has  issued  his  certificate  of  approval, 
naming  the  sum  which  is  to  constitute  the  capi- 

96 


Increase  of  Stock 


tal  of  the  bank  in  the  future.  If  the  increase  of 
capital  renders  the  deposit  of  additional  bonds 
necessary  (see  table  on  page  9),  this  action 
must  be  taken  before  the  issuance  of  the  Comp- 
troller's certificate.  Formal  notice  of  the  pay- 
ment of  the  increase  in  capital  must  also  be 
certified  to  the  Comptroller  by  the  President  or 
Cashier,  in  the  form  given  on  page  189. 

If  it  is  the  desire  of  the  shareholders  to  use  any 
portion  of  the  money  in  the  surplus  fund  or  to 
the  credit  of  undivided  profits  for  the  purpose  of 
increasing  the  capital  stock  of  the  bank,  the 
Board  of  Directors  must  in  the  regular  course 
declare  a  dividend.  The  money  thus  provided 
may  then  be  used  for  the  purpose.  Only  such 
portion  of  the  surplus  fund  as  exceeds  the  amount 
required  by  law  to  be  set  aside  may  be  applied  to 
the  increase  in  capital  in  the  manner  indicated. 
The  requirements  of  the  law  with  regard  to  the 
surplus  fund  of  a  national  bank  are  as  follows  : 

Each  bank  must,  before  the  declaration  of  a 
dividend,  carry  to  its  surplus  fund  one-tenth  of 
its  net  profits  for  the  preceding  half  year  until 
the  surplus  fund  amounts  to  20  per  cent,  of  the 
capital  stock  of  the  bank. 

If  a  national  bank  desires  to  reduce  its  capital 

97 


Reducing  Stock 


stock,  it  should  follow  practically  the  same  pro- 
cedure as  that  required  for  an  increase.  That  is 
to  say,  it  should  notify  the  Comptroller  of  its  in- 
tention ;  should,  upon  receiving  his  approval, 
secure  from  him  the  necessary  blanks  and  in- 
structions, and  should  (in  the  form  provided  on 
page  179)  call  for  a  meeting  of  shareholders  to 
vote  upon  the  proposition.  At  this  meeting  the 
shareholders  may,  by  a  vote  of  those  holding 
two-thirds  of  the  stock,  reduce  the  capital  to  any 
sum  not  below  the  minimum  amount  required 
by  the  National  Bank  Act  (see  table  on  page  3). 

If  the  circulating  notes  of  a  bank  proposing  to 
reduce  its  capital  are  in  excess  of  the  sum  de- 
termined upon  as  the  new  capital  of  the  bank, 
this  circulation  must  by  a  deposit  of  lawful 
money  with  the  Treasurer  of  the  United  States 
be  reduced  to  an  amount  not  in  excess  of  the 
proposed  future  capital.  A  bank  retiring  circu- 
lation as  a  preliminary  to  a  reduction  of  its 
capital  stock  is  not  subject  to  the  provision  lim- 
iting the  retirement  of  circulation  to  $3,000,000 
in  any  one  month. 

When  the  preliminary  steps  outlined  in  the 
foregoing  have  been  completed,  the  President  or 
Cashier  of  the  bank  must  Cf^rtify  to  the  Comp- 

98 


New  Stock  Certificates 


troller  the  adoption  of  a  "  Resolution  to  reduce 
Capital  Stock,"  in  the  form  given  on  page  190. 
The  President  or  Cashier  must  also  certify  to 
the  Comptroller,  in  the  form  given  on  page 
192,  the  fact  that  the  reduction  contemplated 
has  actually  taken  place. 

When  the  reduction  is  made,  the  shareholders 
should  return  their  old  certificates  to  the  bank 
for  cancellation.  New  certificates  for  the  pro- 
posed reduced  capital  should  then  be  issued.  It 
is  lawful  to  issue  certificates  for  fractional  shares 
but  it  is  desirable  to  avoid  this  when  possible. 

No  part  of  the  reduction  of  the  capital  may 
be  carried  to  the  credit  of  surplus  or  undivided 
profits  without  the  unanimous  consent  of  the 
shareholders. 

When  the  above  requirements  have  been  com- 
plied with,  the  Comptroller  will  issue  a  certifi- 
cate approving  the  reduction  of  capital  as  ap- 
plied for. 


99 


CHANGE     OF     NAME     OR 
OF  LOCATION 

r 

A  NATIONAL  BANK  may,  at  any  time, 
change  its  name.  It  may  also  change 
the  place  where  its  operations  are  carried 
on  to  any  other  locality  in  the  same  State  not 
more  than  thirty  miles  distant. 

When  a  bank  desires  to  make  either  one  or 
both  of  the  foregoing  changes,  it  should  first 
correspond  with  the  Comptroller  of  the  Cur- 
rency. If  the  proposition  submitted  meets  with 
his  approval,  a  meeting  of  shareholders  should  be 
called.  (See  page  179  for  notice.)  At  this 
meeting  the  proposed  change  must  receive  the 
approval  of  the  owners  of  at  least  two-thirds  of 
the  capital  stock  of  the  association. 

A  copy  of  the  notice  of  the  meeting  above  re- 
ferred to,  together  v/ith  a  certified  copy,  under 
seal  of  the  bank,  of  the  resolutions,  showing  in 
detail  the  vote  by  which  they  were  adopted, 
must  be  sent  to  the  Comptroller  of  the  Currency. 
(See   page  193  for  form   of  resolutions).     The 

100 


Corporate  Title 


correctness  of  these  resolutions  must  be  certified 
to  the  Comptroller  of  the  Currency  by  the  pres- 
ident or  cashier  in  the  form  given  on  page  194. 

Any  change  in  the  name  or  location  of  a  bank 
necessarily  alters  the  corporate  title  of  the  in- 
stitution. It  is  therefore  necessary  for  the  Board 
of  Directors  to  execute  a  resolution  in  the  form 
given  on  page  164  authorizing  the  Comptroller 
of  the  Currency  to  withdraw  the  bonds  deposited 
in  trust  for  the  bank,  and  further  authorizing 
the  Treasurer  of  the  United  States  to  transfer 
those  bonds  to  the  "  Treasurer  U.   S.   in  trust 

for to  conform  to  change  of  title."    It  should 

be  noted  in  this  connection  that  the  Treasurer's 
receipts  for  the  bonds  proposed  to  be  withdrawn 
must  be  forwarded  with  this  resolution  to  the 
Comptroller  of  the  Currency. 

At  the  same  time,  the  bank  must  transmit  to 
the  Comptroller  an  order  for  new  plates  and 
circulating  notes.  This  order  should  be  headed 
"  Change  of  Title  "  and  should  be  in  the  form 
presented  on  page  1G5.  W\  regulations  regard- 
ing a  bank's  original  order  for  plates  and  circula- 
tion apply  to  this  order  on  account  of  change 
.of  title  and  should  be  carefully  followed.  Com- 
plete information  on  this  point  is  given  in  the 

101 


Change  of  Name 


chapter  on  "National  Bank  Note  Circulation" 
on  page  24. 

If  all  papers  in  connection  with  the  proposed 
change  are  properly  executed,  the  Comptroller 
will  issue  a  certificate  of  approval.  The  bank 
may  then  commence  business  under  the  new 
name  or  in  the  new  location. 


102 


LIQUIDATION 

r 

IF  it  is  desired  to  discontinue  the  existence 
of  a  national  bank,  the  Directors  should 
make  appUcation  to  the  Comptroller  of  the 
Currency  for  his  approval.  If  there  is  no  ob- 
jection on  the  part  of  the  Comptroller  to  this 
step,  he  will  forward  the  necessary  blanks  and 
instructions. 

A  notice  in  the  form  given  on  page  179  should 
be  sent  to  shareholders  to  the  effect  that  a  meet- 
ing is  to  be  held  to  vote  upon  the  question  of 
liquidation. 

The  votes  of  shareholders  owning  not  less 
than  two-thirds  of  the  capital  stock  of  the  bank 
are  necessary  in  order  to  liquidate  the  assets  of 
any  association. 

When  a  meeting  has  been  held  and  a  resolu- 
tion in  the  form  given  on  page  195  has  been 
adopted  by  the  required  two-thirds  vote,  the 
Board  of  Directors,  through  the  President  or 
Cashier,   should   notify  the   Comptroller  of  the 

lOJJ 


Voluntary  Liquidation 


Currency  to  that  effect.  This  notification  must 
be  in  the  form  given  on  page  197,  and  must  bear 
the  seal  of  the  association.  It  must  notify  the 
creditors  of  the  bank  to  present  notes  and  other 
claims  against  the  association  for  payment,  and 
request  the  settlement  of  obligations  to  the  in- 
stitution. 

The  notification,  or  Certificate  for  Voluntary 
Liquidation,  as  it  is  called,  must  appear  for  a 
period  of  two  months  in  some  newspaper  pub- 
lished in  the  City  of  New  York  and  also  in  a 
newspaper  published  in  or  near  the  city  in  which 
the  bank  is  located.  A  certificate  of  each  pub- 
lisher that  the  required  publication  has  been 
made,  together  with  the  notice  from  one  issue  of 
the  newspaper,  should  be  sent  to  the  office  of 
the  Comptroller  of  the  Currency.  This  publica- 
cation  certificate  may  be  in  the  form  given  on 
page  198. 

Within  six  months  after  the  shareholders  have 
voted  to  liquidate  its  assets,  a  national  bank 
must  deposit  with  the  Treasurer  of  the  United 
States  lawful  money  in  an  amount  sufficient 
to  redeem  all  its  outstanding  circulation.  A 
bank  retiring  circulation  for  the  purpose  of  going 
into  voluntary  liquidation  is,  however,  not  sub- 

104 


Release  of  Bonds 


ject  to  the  provision  limiting  the  retirement  of 
circulation  to  $3,000,000  in  any  one  month. 
The  Treasurer  of  the  United  States  will  issue 
duplicate  receipts  for  the  money  deposited  with 
him;  one  of  these  receipts  will  be  sent  to  the 
liquidating  bank  and  the  other  to  the  Comp- 
troller of  the  Currency.  The  receipts  will  state 
the  amount  received  by  the  Treasurer  and  the 
purpose  for  which  it  is  deposited  with  him.  The 
money  is  paid  into  the  Treasury  of  the  United 
States  to  the  credit  of  the  association  depositing 
it,  and  is  held  in  the  redemption  account. 

Whenever  a  deposit  of  lawful  money  is  made 
in  an  amount  sufficient  to  redeem  the  outstand- 
ing circulation  of  a  liquidating  association,  the 
bonds  held  by  the  Treasurer  as  security  for  the 
payment  of  such  circulation  will  be  re-assigned 
to  the  bank.  The  association  and  its  share- 
holders will  then  be  discharged  from  all  liabilities 
connected  with  its  circulating  notes,  and  sucli 
notes  will  be  redeemed  at  the  Treasury  of  the 
United  States  and  charged  to  the  redemption 
account  referred  to  in  the  foregoing. 

If  any  liquidating  bank  fails  to  make  the  neces- 
sary deposit  of  lawful  money  for  thirty  days  after 
the   expiration  of  six    months,  the  Comptroller 

105 


Dividing  Surplus 


of  the  Currency  is  authorized  to  sell  at  public 
auction  in  New  York  City  the  bonds  pledged  as 
security  for  the  circulation  of  the  bank.  If  the 
proceeds  of  such  sale  exceed  the  amount  neces- 
sary to  be  provided  for  the  redemption  and  can- 
cellation of  the  circulation  of  the  bank  and  the 
necessary  expenses  of  the  sale  of  its  bonds,  any 
surplus  remaining  will  be  paid  by  the  Comp- 
troller to  the  bank  or  its  legal  representatives. 
The  shareholders,  into  whose  hands  the  affairs  of 
a  liquidating  bank  pass,  are  generally  regarded 
as  the  legal  representatives  of  the  institution. 

A  national  bank  which  is  in  good  faith  liqui- 
dating its  assets  for  the  purpose  of  consolidating 
with  another  institution,  is  not  required  to  de- 
posit lawful  money  for  the  redemption  of  its 
outstanding  circulation.  Its  assets  and  liabilities 
must,  however,  be  reported  to  the  Comptroller 
of  the  Currency  by  the  association  with  which  it 
is  to  be  consolidated. 


106 


RESTRICTIONS 

NO  national  bank  may  be  organized  with 
a  capital  less  than  $25,000. 
No  national  bank  may  be  organized 
with  a  capital  less  than  $50,000  in   a  town   with 
a  population  of  over  3,000. 

No  national  bank  may  be  organized  with  a 
capital  less  than  $100,000  in  a  town  with  a 
population  of  over  6,000. 

No  national  bank  may  be  organized  with  a 
capital  less  than  $200,000  in  a  town  witli  a  popu- 
lation of  over  50,000. 

No  shares  of  a  national  bank  may  be  issued 
in  denominations  of  less  than  $100,  unless  it  is  a 
conversion  of  a  State  bank,  tlie  shares  of  which 
had  a  par  value  less  than  $100. 

No  national  bank  may  conmience  business 
until  50  per  cent,  of  its  capital  stock  has  been 
paid  in.  The  remainder  must  be  paid  in  instal- 
ments of  at  least  10  per  cent,  of  the  wiiole 
amount  of  the  capital,  each  successive  montli. 

107 


Restrictions 


No  less  than  five  natural  persons  may  form  a 
national  bank. 

No  national  bank  may  transact  business  except 
that  which  is  incidental  to  its  organization  until 
it  has  been  authorized  by  the  Comptroller  to  do  so. 

No  national  bank  may  have  less  than  five 
directors. 

No  person  may  be  a  director  of  a  national 
bank  unless  he  is  a  citizen  of  the  United  States. 

No  less  than  three-fourths  of  the  directors  of 
a  national  bank  must  have  resided  in  the  State, 
territory,  or  district  where  the  bank  they  represent 
is  located,  for  at  least  one  year  immediately  pre- 
ceding the  organization,  and  must  be  residents 
of  the  State  in  which  the  bank  is  located  during 
their  term  of  office. 

No  director  of  a  national  bank  may  own  less 
than  ten  shares  of  the  capital  stock  of  the  bank 
with  which  he  is  connected,  and  such  stock, 
while  he  is  serving  in  the  capacity  of  a  director, 
may  not  be  hypothecated  or  pledged  for  a  loan 
or  for  a  debt. 

No  officer,  teller,  clerk  or  bookkeeper  of  a  bank 
may  act  as  proxy  for  one  of  the  stockholders,  and 
directors  are  held  by  the  Comptroller  to  be  officers 
within  the  meaning  of  this  prohibition. 

108 


Restricfions 


No  shareholder  in  a  national  bank  whose  lia- 
bility is  past  due  and  unpaid  shall  be  allowed  to 
vote  at  any  of  the  meetings  of  the  shareholders 
until  such  liability  has  been  paid. 

No  executors,  administrators,  guardians,  and 
trustees  are  personally  liable  as  stockholders  of  a 
national  bank,  but  the  estates  which  they  repre- 
sent are  equally  liable  with  other  stockholders. 

No  shareholder  in  a  national  bank  is  liable  for 
another  shareholder,  but  each  shareholder  is  held 
equally  liable  for  all  debts,  contracts,  and  engage- 
ments of  the  national  bank  with  which  he  is  con- 
nected to  the  amount  of  the  stock  he  holds 
therein  at  its  par  value,  in  addition  to  the  amount 
invested  in  such  shares. 

No  increase  in  the  capital  of  a  national  bank 
is  valid  until  it  has  all  been  paid  in  and  the 
Comptroller's  Certificate  of  Approval  obtained. 

No  reduction  may  be  made  in  the  capital  of  a 
national  bank  below  the  amount  of  its  outstanding 
circulation,  unless  lawful  money  is  deposited  with 
the  Treasurer  of  the  United  States  for  the  re- 
demption of  the  excess,  and  no  reduction  shall 
be  made  until  the  amount  has  been  reported  to 
the  Comptroller  and  has  been  sanctioned  by  him. 

No  more  than   $.3, 000,000   in  lawful    money 

109 


Restrictions 


may  be  deposited  by  national  banks  in  one  month 
with  the  Treasurer  of  the  United  States  for  the 
redemption  of  their  circulation. 

No  national  bank  shall  issue  post  notes  or 
other  than  regular  bank  notes  provided  for  in  the 
National  Bank  Act. 

No  national  bank  shall  be  a  member  of  a  clear- 
ing house  that  does  not  accept  United  States 
Gold  and  Silver  certificates  in  the  settlement  of 
clearing-house  balances. 

No  step  toward  the  conversion  of  a  State  bank 
into  a  national  bank  may  be  taken  without  the 
approval  of  the  owners  of  two-thirds  of  the  capi- 
tal stock. 

No  converted  institution  may  have  a  less  capi- 
tal than  that  prescribed  for  national  banks  in  the 
National  Bank  Act. 

No  national  bank  that  changes  its  name  and 
its  location  is  thereby  released  from  any  of  its 
old  liabilities,  nor  does  such  change  affect  any 
action  or  proceeding  which  such  an  association 
may  have  been  interested  in  or  taken  part  in. 

No  tax  is  levied  on  circulation  that  does  not 
amount  to  more  than  5  per  cent,  of  the  capital 
stock  at  the  time  the  circulation  was  issued. 

No  tax  shall  be  levied  on  the  circulation  of  a 

110 


Restrictions 


national  bank  if  such  a  bank  has  deposited  with 
the  Treasurer  of  the  United  States  an  equal 
amount  of  legal  tender  for  its  redemption. 

No  bank  that  is  deficient  in  its  reserv^e  require- 
ments shall  increase  its  liabilities  by  making  any 
new  loans  or  discounts  otherwise  than  by  dis- 
counting or  purchasing  bills  of  exchange  pay- 
able at  sight,  nor  shall  it  declare  any  dividend 
out  of  its  profits. 

No  national  bank  in  a  Central  Reserve  City 
may  deposit  any  portion  of  its  required  reserve 
with  another  bank.  It  must  keep  it  all  in  its 
own  vault. 

No  national  bank  in  a  Reserve  City  may  de- 
posit any  of  its  required  reserve  with  other  banks 
in  Reserve  Cities,  but  may  deposit  one-half  in 
banks  in  a  Central  Reserve  City. 

No  national  bank  in  an  Undesignated  City 
may  hold  the  reserve  of  any  other  national  bank 
and  must  keep  two-fifths  of  its  required  reserve 
of  15  per  cent,  in  its  own  vault.  The  rest  may 
be  deposited  in  a  bank  in  a  Reserve  City  or  a 
bank  in  a  Central  Reserve  City. 

No  organization  of  a  national  bank  is  complete 
until  bonds  to  the  amount  of  one-fourth  of  its 
capital  have  been  deposited  with  the  Treasurer 

111 


Restrictions 


of  the  United  States.  In  cases  where  the  capi- 
tal of  the  bank  is  more  than  $150,000,  $50,000  is 
the  minimum  amount  required. 

No  bank  may  take  out  more  than  one-third  of 
its  circulating  notes  in  $5  denominations. 

No  national  bank's  circulation  may  exceed  the 
amount  of  the  bank's  paid-in  capital. 

No  notes  presented  by  a  bank  for  redemption 
may  be  in  sums  of  less  than  $1,000. 

No  account  is  taken  by  the  Treasury  Depart- 
ment in  the  matter  of  the  5  per  cent,  fund  of 
any  of  the  notes  of  a  national  bank  that  have 
been  lost,  stolen,  or  put  in  circulation  without  the 
proper  signatures  of  the  officers. 

No  national  bank  can  refuse  to  receive  at  their 
par  value  the  notes  of  any  other  national  banks. 

No  national  bank  shall  pay  out  the  notes  of 
any  national  bank  that  is  not  redeeming  its  cir- 
culation in  lawful  money  of  the  United  States. 

No  bank  shall  make  less  than  five  reports  dur- 
ing each  year,  according  to  the  form  which  may 
be  prescribed  by  the  Comptroller  of  the  Cur- 
rency. 

No  reports  of  condition  or  of  earnings  and 
dividends  shall  be  made  by  a  national  bank  to 
the  Comptroller  of  the  Currency  without   be- 

112 


Restrictions 


ing  sworn  to  before  a  Notary  Public  or  some 
other  officer  having  an  official  seal  with  proper 
authority  to  administer  oaths. 

No  officers  of  a  national  bank  making  such  a 
report  may  administer  an  oath. 

No  corporate  existence  of  a  bank  may  be  ex- 
tended without  the  consent  in  writing  of  share- 
holders owning  not  less  than  two-thirds  of  the 
capital  stock  of  such  an  association. 

No  association  that  has  defaulted  in  the  pay- 
ment of  its  circulating  notes  shall  pay  out  such 
notes,  discount  any  notes  or  bills,  or  otherwise 
continue  the  business  of  banking,  except  to  re- 
ceive and  safely  keep  money  belonging  to  it  and 
to  deliver  special  deposits. 

No  officer,  clerk,  or  agent  of  a  national  bank 
shall  certify  a  check  drawn  upon  the  association, 
unless  the  person  or  company  drawing  tlie  check 
has  on  deposit  at  the  time  with  the  association 
an  amount  of  money  equal  to  the  amount  speci- 
fied in  the  check. 

No  national  bank  may  purchase  or  hold  any 
real  estate,  outside  of  the  property  on  which  it  is 
doing  business,  excepting  in  cases  where  it  is  neces- 
sary to  take  real  estate  in  payment  for  a  bad 
debt.     When  a  bank  is  compelled  to  do  this,  it 

113 


Restrictions 


must  dispose  of  such  real  estate  within  five  years 
thereafter. 

No  rate  of  interest  shall  be  charged  by  a  na- 
tional bank  that  is  in  excess  of  the  interest  rate 
allowed  by  the  regulations  of  the  State  in  which 
it  is  doing  business.  If  a  State  Government 
discriminates  in  its  regulations  regarding  interest 
in  favor  of  individuals  as  against  State  and  sav- 
ings banks,  a  national  bank  may  be  classed  as  an 
individual  and  charge  accordingly.  When  there 
is  no  regulation  by  the  State  Government,  a  bank 
is  permitted  to  charge  a  maximum  rate  of  7  per 
cent.  Any  evasion  of  the  interest  laws  may  re- 
sult in  a  forfeiture  of  the  eiitire  interest  on  the 
note  or  obligation. 

No  national  bank  is  permitted  to  declare  a 
dividend  until  it  has  twice  each  year  placed  one- 
tenth  of  its  net  profits  for  the  preceding  six 
months  to  surplus  account.  This  rule  does  not 
hold  good  when  the  surplus  amounts  to  20  per 
cent,  of  the  paid-in  capital  of  the  bank. 

No  national  bank  is  permitted  to  hold  any  of 
its  own  shares,  except  when  it  takes  such  shares 
as  security  for  a  bad  debt.  If  it  is  necessary  to 
do  this,  the  bank  must  dispose  of  the  shares 
within  six  months. 

114 


Resf/icfions 


No  national  bank  is  allowed  to  loan  any  one 
person  or  corporation  more  than  a  one-tenth 
part  of  its  capital  actually  paid  in.  The  discount 
of  bills  of  exchange  drawn  against  actual  existing 
values,  and  the  discount  of  commercial  or  busi- 
ness paper  actually  owned  by  the  person  negoti- 
ating the  same,  shall  not  be  considered  as  money 
borrowed. 

No  national  bank  may  draw  money  from  its 
capital  account  to  pay  out  in  the  form  of  divi- 
dends. 

No  national  bank,  when  its  losses  equal  its  un- 
divided profits,  shall  pay  a  dividend  until  it  has 
deducted  from  its  net  profits  all  bad  debts  and 
losses. 

No  debt  due  a  national  bank  on  which  inter- 
est is  past  due  and  unpaid  for  a  period  of  six 
months,  unless  the  same  is  well  secured  and  in 
process  of  collection,  shall  be  considered  a  good 
debt. 


115 


NEW    YORK 
CORRESPONDENT 


ONE  of  the  most  important  steps  to  be 
taken  by  the  dh-ectors  and  officers  of  a 
new  bank  is  the  selection  of  its  reserve 
correspondent.  This  selection  should  have  atten- 
tion before  the  organization  of  the  bank  is  com- 
pleted. The  large  institutions  in  the  Reserve 
Cities  are  accustomed  to  handling  all  the  details 
of  organization,  and  are  often  in  a  position  to  be 
of  much  service  in  that  connection.  Not  only 
may  they  be  consulted  with  regard  to  detailed 
matters  of  that  character,  but  they  may  be  called 
upon  to  secure  for  the  new  banks,  at  the  most 
favorable  rates  possible,  the  necessary  charter 
bonds,  which  must  be  deposited  with  the  Treas- 
urer of  the  United  States  as  a  preliminary  to  the 
beginning  of  actual  business.  The  new  bank 
may  also  wish  an  advance  upon  the  bonds  neces- 
sary to  be  purchased,  pending  the  issuance  of  its 
circulating  notes. 

After  the   organization  has  been    completed, 

116 


Use  of  CojTespondent 


the  new  bank  will  have  ahnost  daily  occasion, 
both  on  its  own  account  and  on  that  of  its  cus- 
tomers, to  draw  metropolitan  drafts;  and  will, 
in  the  regular  course  of  its  business,  find  it  neces- 
sary to  handle  through  its  reserve  correspondent 
collections  of  bank  items  received  from  its  de- 
positors. In  addition  to  those  daily  needs,  the 
country  bank  will  find  it  desirable  to  establish 
relations  where,  in  case  of  necessity,  it  can 
receive  an  extension  of  credit. 

In  fact,  the  relation  with  the  city  correspond- 
ent will  become  of  greater  and  greater  impor- 
tance as  the  business  of  the  bank  expands,  and  in 
the  selection  most  careful  consideration  should 
be  given  to  all  the  various  relationships  which 
will  be  developed.  A  question  of  first  impor- 
tance in  the  selection  of  a  city  correspondent  is 
security.  A  country  bank  may  keep  from  one- 
half  to  two-thirds  of  its  reserve  balance  with  its 
city  correspondent.  No  matter  how  well  man- 
aged the  affairs  of  the  local  bank  may  be,  it 
could  not  escape  serious  inconvenience  in  case 
there  should,  from  any  cause,  be  embarrassment 
of  the  city  institution. 

There  is  another  side  to  this  question  of  secur- 
ity.    The  fact  that  the  country  bank  is  associ- 

117 


Factors  in  Selection 


ated  with  a  strong  city  institution  will  often  be 
a  determining  factor  in  the  confidence  with 
which  a  new  institution  is  regarded.  The  city 
bank  is  bound  to  feel  itself  in  a  way  responsible 
for  the  welfare  of  its  correspondent  and  is,  there- 
fore, careful  to  accept  the  responsibility  only 
after  satisfying  itself  that  it  may  safely  set  the 
seal  of  its  approv  al  upon  the  smaller  institution. 
This  fact  in  itself  will  often  prove  of  much  im- 
portance in  the  new  bank's  relations  with  insti- 
tutions which  may  wish  to  entrust  their  business 
to  it. 

In  making  its  choice  of  a  city  correspondent, 
the  new  bank  will  be  more  nearly  assured  of 
securing  the  foregoing  advantages  if  it  entrusts 
its  city  balance  to  an  institution  having  a  large 
capital  and  a  considerable  surplus.  Those  two 
factors  make  for  safety,  and  certainly  the  safety 
of  reserve  balance  should  be  one  of  the  main 
determining  reasons  in  the  selection  of  a  city 
correspondent. 

Aside  from  the  safety  of  its  balance,  the  stand- 
ing given  to  it  and  the  probability  that  its  loan 
requirements  will  be  cheerfully  met  in  time  of 
need,  an  important  factor  of  the  country  bank's 
association  with  an  institution  of  magnitude  is 

118 


Heciprocal  Relations 


the  amount  of  reciprocal  business  in  the  way  of 
collections  which  can  be  sent  to  tlie  country 
bank  by  the  large  city  institution  through  which 
many  thousands  of  checks  are  cleared  daily. 

The  country  bank  receiving  collection  items 
from  its  city  correspondent  has  oftentimes  the 
advantage  of  receiving  checks  on  its  neighboring 
banks.  The  amount  represented  by  these  checks 
on  neighboring  banks  is  of  value,  in  offsetting 
the  amount  presented  at  the  bank's  counter 
for  payment,  or  is  of  use  in  offsetting  cliecks 
whicli  may  be  presented  through  the  local  clear- 
ing house.  It  will  be  seen  that  a  country  bank 
receiving  from  its  city  correspondent  the  largest 
amount  of  checks  on  the  associated  banks  of  its 
city,  is  practically  protected  against  the  unex- 
pected witlidrawal  of  large  sums  through  chan- 
nels other  than  its  own, — as  should  such  with- 
drawals be  made,  the  amount  of  local  checks 
sent  to  it  by  its  city  correspondent  may  be  used 
to  offset  them. 

The  country  bank  associated  with  a  liberal 
city  institution  may  look  forward  confidently  to 
receiving  tlie  fairest  possible  treatment  in  the 
handling  of  its  own  collections.  The  associated 
banks  of  New  York  are  subject  to  certain  rules 

119 


Collection  Districts 


and  regulations  which  have  been  put  in  force  by 
the  clearing  house.  Those  regulations  provide 
that  associated  banks  may  use  their  discretion 
with  regard  to  charges  for  the  collection  of  items 
on  the  largest  Eastern  cities.  The  National 
City  Bank,  in  line  with  its  policy  to  extend  the 
most  liberal  treatment  possible  to  its  correspond- 
ents, handles  items  on  the  so-called  discretionary 
points  without  charge. 

The  remainder  of  the  United  States  is  divided 
into  two  sections  on  which  charges  of  one-tenth 
and  one-fourth  of  one  per  cent,  respectively,  are 
made.  For  the  collection  of  items  on  points 
east  of  the  Mississippi  River  and  north  of 
Tennessee,  a  charge  of  one-tenth  of  one  per 
cent,  is  made.  For  the  collection  of  items  on 
all  other  points  (with  the  exception  of  Missouri, 
which  is  in  the  one- tenth  class),  a  charge  of  one- 
fourth  of  one  per  cent,  is  made.  Items  payable 
in  Canada  and  the  Provinces  are  also  subject  to 
a  charge  of  one-fourth  of  one  per  cent.  When 
the  fact  is  considered  that  the  country  bank  is 
enabled  to  draw  against  funds  forwarded  to  its 
New  York  correspondent  for  collection  with 
practically  the  same  freedom  as  may  be  done  in 
the  case  of  direct  New  York  funds,  it  will  be 

120 


Direct  Collections 


seen  that  the  charges  in  question  are  not  unrea- 
sonable. 

The  New  York  bank  derives  no  monetary 
profit  from  transactions  arising  from  the  direct 
presentation  of  its  collection  items.  AMien, 
however,  the  New  York  bank  can  send  checks, 
drafts  and  notes  directly  to  the  points  on  which 
they  are  drawn  and  have  them  presented 
promptly  for  payment,  there  will  be  considerable 
advantage  derived,  not  only  from  the  saving  of 
time  which  will  result,  but  also  from  the  early 
verification  of  the  genuineness  of  the  items  in 
question. 

The  National  City  Bank  is  glad  to  extend  an 
offer  of  its  services  to  institutions  which  may 
contemplate  selecting  or  adding  to  the  number 
of  their  correspondents  in  New  York  City. 
This  bank,  which  began  business  as  a  State  insti- 
tution in  1812,  was  converted  into  a  national 
bank  in  18G5  and  has,  since  its  inception,  sliown 
a  steady,  satisfactory  growth  and  develop- 
ment. Beginning  as  a  national  institution  with 
a  capital  of  $1,000,000,  it  increased  that  capital 
in  1900  to  $10,000,000  and  again  increased  it  in 
1902  to  $25,000,000.  The  surplus  and  un- 
divided profits  of  the  bank  on  March  28,  1904, 

121 


The  National  City  Bank 


the  date  of  its  last  report  to  the  Comptroller  of 
the  Currency,  were  $17,675,926.  These  figures 
are  augmented  by  its  stockholders'  liability  of 
$25,000,000,  making  a  total  guarantee  for  the 
protection  of  reserve  balances  kept  with  it  (as 
shown  by  its  capital,  surplus  and  stockholders' 
liability)  of  $67,675,926. 

The  National  City  Bank  is  in  a  position  to 
handle  all  detailed  matters  connected  with  the 
organization  of  new  banks.  It  will,  if  desired, 
instruct  its  Washington  representative  by  wire 
to  present  in  person  to  the  Comptroller's  office  a 
bank's  request  for  approval  to  organize.  This 
action  will  tend  to  expedite  considerably  the  for- 
warding of  the  necessary  papers  and  the  prompt 
action  of  the  Comptroller's  office  upon  the  bank's 
application. 

The  bank  has  a  completely  equipped  bond 
department,  to  which  may  be  entrusted  the  pur- 
chase of  the  charter  bonds  of  the  new  bank.  These 
bonds  will  be  procured  for  new  organizations 
without  commission,  at  the  most  favorable  rates 
permitted  by  the  current  market,  and  will  be  de- 
posited in  Washington  with  the  proper  official 
without  charge.  If  the  new  bank  desires  an  ad- 
vance upon  the  bonds  pending  the  issuance  of  its 

122 


Bond  Depa?imc)it 


circulating  notes,  an  arrangement  of  this  charac- 
ter will  be  made  at  low  rates.  The  bond  depart- 
ment of  the  National  City  Eank  will  also,  if  it  is 
desired,  attend  to  putting  the  notes  of  the  new 
bank  in  circulation.  Should  the  bank  at  any  time 
desire  to  substitute  one  issue  of  bonds  for  another, 
or  to  withdraw  any  portion  of  the  bonds  on  de- 
posit in  excess  of  the  amount  of  the  charter  bonds, 
the  National  City  Bank  will  attend  to  such  sub- 
stitution or  withdrawal  without  charge. 

The  transaction  of  such  business  is  greatly  facil- 
itated by  the  fact  that  the  National  City  Bank 
has  its  own  telegraph  instruments  and  operators, 
thus  insuring  the  utmost  despatch  in  executing 
the  telegraphic  requests  of  its  correspondents. 

Calculations  showing  the  relative  profits  on  the 
various  issues  of  Government  bonds  as  security 
for  circulation  or  public  funds,  as  made  by  the 
Actuary  of  the  United  States  Treasury  Depart- 
ment, will  be  furnished  to  banks  desiring  them. 
The  bond  department  also  keeps  itself  fully  in- 
formed regarding  the  attitude  of  the  Secretary  of 
the  Treasury  toward  the  creation  of  Government 
Depositaries  and  regarding  the  regulations  of  the 
Treasury  Department  concerning  these  Govern- 
ment agents.     Information  of  this  character  of 

123 


Washington  Repi^sentative 


interest  to  national  banks  is  embodied  in  a  monthly 
circular  published  by  the  bank.  This  circular  will 
be  sent  upon  request. 

The  National  City  Bank  has  close  relations  with 
the  leading  financial  institution  in  Washington, 
the  Riggs  National  Bank.  Through  this  associa- 
tion, it  is  enabled  to  offer  its  correspondents  the 
advantage  of  the  most  extensive  facilities  at  the 
Capital.  It  will  be  seen  that  the  presence  of  a 
closely  affiliated  representative  in  Washington 
adds  materially  to  the  thoroughness  and  prompt- 
ness with  which  matters  connected  with  the  de- 
posit of  bonds  at  the  Treasury,  the  expediting  of 
matters  connected  with  the  organization  of  banks 
and  the  proper  presentation  of  applications  con- 
cerning circulation  and  Government  deposits,  can 
be  effected.  The  Riggs  National  Bank  is  in  a 
position  to  act  for  correspondents  before  the  Treas- 
ury in  all  matters  ordinarily  entrusted  to  a  na- 
tional bank  agent.  These  matters  include  the 
sending  of  advice  by  wire  of  the  Comptroller's 
calls  for  reports  of  condition,  the  witnessing  of 
the  destruction  of  worn-out  and  mutilated  circu- 
lation, and  the  annual  examination  of  bonds  on 
deposit  with  the  Treasurer  of  the  United  States. 
The  last-named   services  are   required  by  law. 

124 


Currency  Shipments 


Through  its  association  with  the  Riggs  National 
Bank,  the  National  City  Bank  is  enabled  to  per- 
form them  for  its  correspondents  without  charge. 

If  it  is  desired,  arrangements  may  be  made  with 
the  Riggs  National  Bank  to  ship  correspondents 
their  incomplete  currency.  This  currency  is  pre- 
pared by  the  Bureau  of  Engraving  and  Printing 
on  the  order  of  the  Comptroller's  office,  and  is  or- 
dinarily shipped  by  express  at  the  expense  of  the 
bank  for  which  it  is  intended.  The  Riggs  Na- 
tional Bank  will,  if  desired,  ship  this  incomplete 
currency  by  registered  mail,  insured,  the  only 
charge  in  this  connection  being  the  postage  fees 
and  insurance  cost.  A  considerable  saving  in 
transportation  charges  may  be  effected  in  this 
way. 

So  far  no  mention  has  been  made  of  the  close 
relations  which  the  National  City  Bank  enter- 
tains with  banking  institutions  of  prominence 
abroad.  It  counts  as  its  correspondents  in  Lon- 
don, Berlin,  Paris,  and  the  littoral  of  Europe  the 
most  prominent  institutions  and  is  thus  enabled 
to  secure  for  its  correspondents,  through  its  in- 
termediary, exceedingly  prompt  service  in  all 
transactions  entrusted  to  its  care.  The  Amer- 
ican travelling  public    hails   from    no  particular 

125 


Foreign  Exchange 


locality,  hence  banks  in  the  interior,  no  matter 
how  remote  from  the  seaboard,  may  be  called 
upon  at  an  instant's  notice  to  transfer  funds  to 
their  clients  who  are  sojourning  abroad,  and  as 
such  calls  are,  as  a  rule,  matters  of  urgency,  the 
machinery  is  readily  set  in  motion  and  the  most 
exacting  requirements  are  complied  with  without 
any  delay. 

Other  demands  are  frequently  made  upon  in- 
terior banks,  which,  without  the  intervention  of 
a  prominent  institution  at  the  seaboard,  they  are 
unable  to  comply  with,  and  it  is  here  the  Na- 
tional City  Bank  can  offer  facilities  to  meet 
every  possible  contingency. 

The  National  City  Bank  has  a  well-equipped 
Foreign  Exchange  Department,  whose  transac- 
tions run  into  the  millions  daily.  The  scope  of 
its  operations  varies  from  the  small  remittance  to 
the  financing  of  important  bond  issues.  In  fact, 
while  the  machinery  of  its  organization  is  very 
intricate,  it  is  nevertheless  one  that  works  with 
remarkable  efficiency  and  promptness. 

The  clientele  of  every  interior  bank  embraces 
citizens  of  foreign  nationality,  whose  ties  with 
the  mother  country  are  still  intimate,  hence  a 
constant  interchange  of  remittances  takes  place. 

126 


Letters  of  Credit 


The  local  merchants  may  be  desirous  of  im- 
porting direct,  thus  saving  the  middleman's  prof- 
its, or,  on  the  other  hand,  clients  may  have  goods 
to  dispose  of  abroad,  but  do  not  care  to  await  re- 
mittance from  the  other  side,  or  the  terms  of  the 
sale  are  such  that  two  or  three  months  would 
elapse  before  tliey  were  placed  in  funds.  It  is 
one  of  the  functions  of  the  National  City  Bank 
to  purchase  approved  bills  of  exchange  with 
shipping  documents  attached,  to  provide  com- 
mercial letters  of  credit  for  the  purchase  of  goods 
abroad,  also  to  furnish  the  travelling  public  with 
Circular  Notes  and  with  Circular  Letters  of 
Credit.  In  fact,  the  equipment  is  such  that  every 
transaction  of  a  banking  nature,  no  matter  where 
located,  can  be  attended  to  with  the  minimum 
of  cost  and  without  loss  of  time. 

The  services  of  this  department  are  always  at 
the  disposal  of  the  bank's  interior  friends  and  a 
cordial  invitation  is  extended  them  to  make 
use  of  those  services  wherever  and  whenever 
opportunity  offers. 

The  National  City  l^ank  has  a  most  complete 
credit  department,  which  is  always  at  the  dis- 
posal of  its  correspondents.  This  is  of  great 
\  alue  to  an  institution  situated  in  the  interior,  as 

127 


Loans  and  Discounts 


it  is  always  able  accurately  and  speedily  to  learn 
the  standing  of  individuals  and  corporations. 

The  various  departments  of  the  National  City 
Bank  are  carefully  systematized,  and  it  is  thus 
placed  in  a  position  to  handle  promptly  all  the 
New  York  business  entrusted  to  it.  Its  Board 
of  Directors  is  of  a  most  representative  character, 
enabling  it  to  be  of  service  to  correspondents  in 
almost  any  line  in  which  their  financial  interests 
may  extend. 

In  the  extension  of  credit,  either  through 
loans  or  discounts,  it  is  the  aim  of  the  National 
City  Bank  to  afford  its  correspondents  the  most 
liberal  treatment,  both  as  regards  amount  and 
rate.  The  bank  is  bound  by  no  hard  and  fast 
rules  regarding  discount  and  loan  rates,  but  aims 
always  to  give  correspondents  the  lowest  quota- 
tions permitted  by  the  current  money  market. 

In  a  word,  the  National  City  Bank  aims  to 
offer  its  correspondents  facilities  which  they  will 
not  find  duplicated  by  any  other  institution,  and 
it  welcomes  correspondence  looking  to  the  estab- 
lishment of  reciprocal  relations.  The  bank  en- 
deavors to  add  constantly  to  its  already  exten- 
sive facilities  and  it  particularly  desires  to  have 
its  correspondents  feel  free  to  consult  it  on  any 

128 


General  Facilities 


point  regarding  the  management  of  their  institu- 
tions, the  standing  of  those  with  whom  they  may- 
have  deahngs,  and  other  matters  concerning 
which  there  may  be  some  question.  It  is  the 
aim  of  the  National  City  Bank  to  make  itself 
broadly  useful  to  institutions  throughout  the 
country,  and  it  is  hoped  that  those  institutions 
will  make  use  of  its  facilities  to  the  fullest  pos- 
sible extent. 


129 


DOCUMENTS     USED     IN    CONNECTION    WITH    THE    OR- 
GANIZATION   AND    CONDUCT    OF    A    NATIONAL 
BANK,    PRESENTED     IN    THE     ORDER  IN 
WHICH    THEY    ARE    FIRST    MEN- 
TIONED   IN    THE    TEXT. 


ORDER    OF    INSERTION 


Organization.  p^ko 

Application 135 

Articles  of  Association 136 

Organization  Certificate 140 

Form  of  Stock  Certificate 142 

Joint  Oath  of  Directors 142 

Oath  of  Director 143 

By-Laws  ...          144 

Signatures  of  Oflicers 151 

Certificate  of  Original  Payment  of  Capital       ....  152 

Certificate  of  Subsequent  Payments  of  Capital     .     .     .  153 

Charter 154 

Oath  of  Publication          155 

Stockholders'  Proxy     .          156 

Conversion  of  State  Banks. 

Authority  for  Conversion 157 

Application  to  Comptroller 158 

Articles  of  Association 159 

Organization  Certificate 160 

Certificate  of  Payment  of  Capital  Stock 162 

131 


Order  of  Insertion 


Circulation. 

Resolution  Authorizing  Bond  Substitution 
Original  Order  for  Plates  and  Circulation 
Supplementary  Order  for  Circulation     .     . 
Semi-Annual  Return  of  Circulation   .     .     . 
Report  of  Bonds  on  Deposit  with  Treasurer 


Page 

164 
165 
166 
166 
168 


Bank  Reserves. 

Forms  for  Calculating  Reserve  169-170 

GOVERNMEXT   DEPOSITS. 

Certificate  of  Deposit 171 

Transcript  of  Account 172-173 

Weekly  Report  of  Deposits 174 

Monthly  Report  of  Deposits 175 

Daily  Report  of  Deposits ,     .     176-177 

Dates  for  Rendering  Transcripts  ....     o     ...  178 

Notice  of  Shareholders'  Meeting. 

Form  of  Notice      .     « 179 

Extension  of  Corporate  Existence. 

Application  to  Comptroller 180 

Amendment  of  Articles  of  Association 181 

Power  of  Attorney,  Individual 182 

Power  of  Attorney,  Corporate 183 

Certificate  of  Amendment  of  Articles 184 

Extension  of  Charter 185 

Order  for  New  Plates  and  Circulation 186 

132 


Ordei^  of  Insertion 


Re-extknsion  of  Corporate  Existence.  Page 

Re-extension  of  Charter 187 

Chanqbs  in  Capital  Stock. 

Resolution  to  Increase  Capital 188 

Certificate  of  Increase  of  Capital 189 

Resolution  to  Reduce  Capital 190 

Certificate  of  Reduction  of  Capital 19'-2 

Change  of  Name,  Etc. 

Resolution  Authorizing  Change 193 

LlQUID.*.TION. 

Resolution  for  Voluntary  Liquidation 195 

Certificate  for  Voluntary  Liquidation 196 

Oath  of  Publication 198 


133 


DETAILED  STEPS  IN  ORGANIZATION 

A* 

APPLICATION  TO  ORGANIZE  A  NATIONAL  BANK 

,  190— 


To  THE  Comptroller  of  the  Currency, 

Washington,  D.  C. 

Sir  :  Notice  is  hereby  given  that  we,  the  undersigned, 
being  natural  persons,  and  of  lawful  age,  intend,  with  others, 
to  organize  a  National  Banking  Association,  under  the  title 

of  "The ,"  to  be  located  at ,  County  of ,  State 

of ,  with    capital    of  $ ,    to  succeed  the bank 

of . 

We  request  that  the  title  be  reserved  for  a  period  of  sixty 
days  and  the  necessary  organization  papers  and  instructions 

sent  to at . 

[This  application  must  be  signed  by  at  least  five  prospective  share- 
holders, and  indorsed  as  indicated.  ] 


Signatures  of 
Applicants. 

Residences. 

Business. 

Financial 

Strength, 

in  Figures. 

The  signers  of  this  application  are  known  to  be  reputable 
citizens,  and  the  foregoing  information  in  reference  to  their 
business  and  financial  standing  is,  in  my  opinion,  correct. 

* 


•Signature  of  Member  of  Congress,  judge  of  court,  or  other  prom- 
inent public  official. 

135 


Official  Forms 


ARTICLES   OF   ASSOCIATION 

For  the  purpose  of  organizing  an  association  to  carry  on 
the  business  of  banking,  under  the  laws  of  the  United  States, 
the  undersigned  subscribers  for  the  stock  of  the  Association 
hereinafter  named  do  enter  into  the  following  Articles  of 
Association  : 

First.   The  title  of  this  Association  shall  be  "The ." 


(Care  should  be  taken  to  state  exact  title,  including  name  of  City,  but 
not  of  State.) 

Second.  The  place  where  its  banking  house  or  office  shall 
be  located,  and  its  operations  of  discount  and  deposit  carried 
on,  and  its  general  business  conducted,  shall  be 

Third.  This  section  may  be  worded  in  any  one  of  four 
ways : 

1st. — The  Board  of  Directors  shall  consist  of share- 
holders. The  first  meeting  of  the  shareholders  for  the  elec- 
tion of  directors  shall  be  held  at on  the or  at  such 

other  place  and  time  as  a  majority  of  the  undersigned  share- 
holders may  direct. 

2d. — The  Board  of  Directors  shall  consist  of  not  less  than 
(insert  minimum  number)  and  not  more  than  (insert  maximum 
number)  shareholders.  The  number  of  directors  elected  at 
each  annual  meeting  shall  constitute  the  board  for  the  year, 
all  vacancies  to  be  filled  in  accordance  with  the  provisions  of 
Section  5148.     The  first  meeting  of  the  shareholders  for  the 

election  of  directors  shall  be  held  at on  the or  at 

such  other  place  and  time  as  a  majority  of  the  undersigned 
shareholders  may  direct. 

3d. — The  Board  of  Directors  shall  consist  of share- 
holders and  the  following  persons  (here  insert  their  names) 
are  hereby  appointed  directors  of  this  Association,  to  hold 

136 


and  Documents 


their  offices  as  such  until  the  regular  election  takes  place 
pursuant  to  the  fourth  article  of  these  Articles  of  Association 
and  until  their  successors  are  chosen  and  have  qualified. 

4th. — The  Board  of  Directors  shall  consist  of  not  less  than 
(insert  minimum  number)  and  not  more  than  (insert  maxi- 
mum number)  shareholders,  and  the  following  named  per- 
sons (here  insert  their  names)  are  hereby  appointed  directors 
of  this  Association,  to  hold  their  offices  as  such  until  the 
regular  annual  meeting  takes  place  pursuant  to  the  fourth 
article  of  these  Articles  of  Association  and  until  their  succes- 
sors are  chosen  and  have  qualified. 

It  will  be  noted  that  when  the  directors  are  named  in  the  Articles  of 
Association,  it  is  unnecessary  to  provide  for  holding  a  meeting  for  the 
election  of  directors. 

Section  5148  referred  to  in  forms  2  and  4  of  the  foregoing  provides 
that  vacancies  in  the  board  shall  be  filled  by  appointment  by  the  re- 
maining directors  and  any  director  so  appointed  shall  hold  his  place 
until  the  next  election. 

Fourth.  The  regular  annual  meetings  of  the  shareholders 
for  the  election  of  Directors  shall  be  held  at  the  banking 
house  of  this  Association  on  the  second  Tuesday  of  January 
of  each  year ;  but  if  no  election  shall  be  held  on  that  day,  it 
may  be  held  on  any  other  day,  according  to  the  provisions  of 
Section  5149  of  the  Revised  Statutes  of  the  United  States, 
and  all  elections  shall  be  held  according  to  such  regulations 
as  may  be  prescribed  by  the  Board  of  Directors,  not  incon- 
sistent with  the  provisions  of  the  National  Banking  Law,  and 
of  these  articles. 

Fifth.   The  capital   stock  of  this  Association  shall  be 

thousand  dollars,  divided  into  sliares  of  one  hundred  dollars 
each  ;  but  the  capital  may,  with  the  approval  of  the  Comp- 
troller of  the  Currency,  be  increased  at  any  time  by  share- 

137 


Official  Forrns 


holders  owning  two-thirds  of  the  stock,  according  to  the 
provisions  of  an  act  of  Congress  approved  May  1,  1886;  and 
in  case  of  the  increase  of  the  capital  of  the  Association, 
each  shareholder  shall  have  the  privilege  of  subscribing  for 
such  number  of  shares  of  the  proposed  increase  of  the  capi- 
tal stock  as  he  may  be  entitled  to  according  to  the  number 
of  shares  owned  by  him  before  the  stock  is  increased. 

Sixth.  The  Board  of  Directors,  a  majority  of  whom  shall 
be  a  quorum  to  do  business,  shall  elect  one  of  its  members 
President  of  this  Association,  who  shall  hold  his  office  (un- 
less he  shall  be  disqualified,  or  be  sooner  removed  by  a  two- 
thirds  vote  of  all  the  members  of  the  Board)  for  the  term  for 
which  he  was  elected  a  Director.  The  Directors  shall  have 
power  to  elect  a  Vice-President,  who  shall  also  be  a  member 
of  the  Board  of  Directors,  and  who  shall  be  authorized,  in 
the  absence  or  inability  of  the  President  from  any  cause,  to 
perform  all  acts  and  duties  pertaining  to  the  office  of  Presi- 
dent except  such  as  the  President  only  is  authorized  by  law 
to  perform,  and  to  elect  or  appoint  a  Cashier,  and  such  other 
officers  and  clerks  as  may  be  required  to  transact  the  business 
of  the  Association ;  to  fix  the  salaries  to  be  paid  to  them, 
and  continue  them  in  office,  or  to  dismiss  them  as,  in  the 
opinion  of  a  majority  of  the  Board,  the  interests  of  the 
Association  may  demand. 

The  Directors  shall  have  power  to  define  the  duties  of  the 
officers  and  clerks  of  the  Association,  to  require  bonds  from 
them,  and  to  fix  the  penalty  thereof ;  to  regulate  the  manner 
in  which  elections  of  Directors  shall  be  held,  and  to  appoint 
judges  of  the  elections ;  to  make  all  by-laws  that  it  may  be 
proper  for  them  to  make  not  inconsistent  with  law,  for  the 

138 


and  Documeiits 


general  regulation  of  the  business  of  the  Association  and  the 
management  of  its  affairs,  and  generally  to  do  and  perform 
all  acts  that  it  may  be  legal  for  a  Board  of  Directors  to  do 
and  perform  under  the  Revised  Statutes  aforesaid. 

Seventh.  This  Association  shall  continue  for  the  period 
of  twenty  years  from  the  date  of  the  execution  of  its  Organi- 
zation Certificate,  unless  sooner  placed  in  voluntary  liquida- 
tion by  the  act  of  its  shareholders,  owning  at  least  two-thirds 
of  its  stock,  or  otherwise  dissolved  by  authority  of  law. 

Eighth.  These  Articles  of  Association  may  be  changed  or 
amended  at  any  time  by  shareholders  owning  a  majority  of 
the  stock  of  the  Association,  in  any  manner  not  inconsistent 
with  law ;  and  the  Board  of  Directors,  or  any  three  share- 
holders, may  call  a  meeting  of  the  shareholders  for  this  or 
any  other  purpose,  not  inconsistent  with  law,  by  publishing 
notice  thereof  for  thirty  days  in  a  newspaper  published  in 
the  town,  city,  or  county  where  the  Bank  is  located,  or  by 
mailing  to  each  shareholder  notice  in  writing  thirty  days 
before  the  time  fixed  for  the  meeting. 

In  WITNESS  WHEREOF,  we  have  hereunto  set  our  hands 
this day  of 190  . 


I  CERTIFY  that  these  Articles  of  Association  are  executed 
in  duplicate  ;  that  one  of  the  instruments  so  executed  is  the 
foregoing,  and  that  the  other,  alike  in  all  respects,  is  on  file 
with  said  Bank. 

(To  be  signed  by  President  or  Cashier.) 190. 

139 


Official  Forms 


ORGANIZATION   CERTIFICATE 

We,  the  undersigned,  whose  names  are  specified  in  article 
fourth  of  this  Certificate,  having  associated  ourselves  for  the 
purpose  of  organizing  an  Association  for  carrying  on  the 
business  of  banking,  under  the  laws  of  the  United  States,  do 
make  and  execute  the  following  Organization  Certificate  : 

First.  The  title  of  the  Association  shall  be  "The ." 

(Insert  exact  title  of  bank,  including  the  name  of  town,  but  not 
that  of  State.) 

Second.   The     said   Association   shall    be    located   in   the 

of ,  County  of ,  and  State  of ,  where  its 

operations  of  discount  and  deposit  are  to  be  carried  on. 

(In  giving  the  name  of  the  proposed  location  of  the  bank,  indicate 
whether  the  place  is  a  "Village,"  "Town,"  or  "City."  Also  give 
the  names  of  County  and  State. ) 

Third.   The  Capital  Stock  of  this  Association  shall  be 

dollars  ($ ),  and  the  same  shall   be  divided  into 

shares  of  one  hundred  dollars  each. 

(In  this  section  care  should  be  taken  to  give  both  the  amount  of 
capital  of  the  bank  and  the  number  of  shares  into  which  this  capital 
is  divided.) 

Fourth.  The  name  and  the  residence  of  each  shareholder 
of  this  Association,  with  the  number  of  shares  held,  are  as 
follows  : 


Name. 

Residence. 

No.  of  Shares. 

1 

9 

s 

Insert  the  names  of  all  shareholders,  their  residences,  the  number  of 
shares  held  by  each  shareholder,  and  the  total  number  of  shares. 
(The  names,  etc.,  oi all  the  shareholders  must  appear  on  this  page.) 

140 


and  Documents 


Fifth.  This  Certificate  is  made  in  order  that  we  may  avail 
ourselves  of  the  advantages  of  the  aforesaid  laws  of  the 
United  States. 

In  witness  whereof,  we  have  hereunto  set  our  hands,  this 
day  of ,  190—. 


1 
2 
3 


(Those  that  have  signed  the  articles  of  association  are  required  to 
sign  on  this  page,  and  they  must  do  so  in  their  own  handwriting. 
They  must  also  make  acknowledgment  on  the  following  page.) 


State  of. 

ss : 


County  of. 


Before  the  undersigned,  a of ,  personally  appeared 


to  me  well  known,  who  severally  acknowledged  that  they 
executed  the  foregoing  Certificate  for  the  purposes  therein 
mentioned. 

Witness  my  hand  and  seal  of  Office  this 

day  of 190—. 

;  Official  Seal  ; 
•    of  Officer.     ; 

141 


Official  Forms 


FORM    OF    STOCK    CERTIFICATE 
National  Bank 


No.  Shares. 

Be   it  known   that entitled  to Shares   of    One 

Hundred  Dollars  each,  in  the  Capital  Stock  of  the Bank 

of transferable  only  on  the  books  of  the  Bank  by  the 

said or Attorney  on  surrender  of  this  Certificate. 

New  York. 

Seal 


Cashier. 


190— 
—  President. 


JOINT   OATH   OF   DIRECTORS 

State  of ") 

>  ss : 
County  of ) 

We,  the  undersigned  Directors  of  "The of ,"  in  the 

State  of ,  being  citizens  of  the  United  States,  and  resi- 
dents of  the  State  of ,  do,  each  for  himself,  and  not  one 

for  the  other,  solemnly  swear  that  we  will  severally,  so  far  as 
the  duty  devolves  on  us,  diligently  and  honestly  administer 
the  affairs  of  said  Association  ;  and  that  we  will  not  know- 
ingly violate,  or  willingly  permit  to  be  violated,  any  of  the 
provisions  of  the  Statutes  of  the  United  States  under  which 
said  Association  has  been  organized  ;  and,  each  for  himself, 
does  solemnly  swear  that  he  is  the  owner  in  good  faith,  and 
in  his  own  right,  of  the  number  of  shares  of  stock  required 
by  said  Statutes,  subscribed  by  him  or  standing  in  his  name 

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and  Documents 


on  the  books  of  the  said  Association  ;  and  that  the  same  is 
not  hypothecated,  or  in  any  way  pledged  as  security  for  any 
loan  or  debt. 


Name. 
(Original  signatores  necesBary.) 


1. 

2. 


Place  of  Residence. 


Subscribed  and  Sworn  to  this 

day  of 1 90 — ,  before  the 


undersigned,  a 
5aid  county. 


in  and  for 


Official  Seal 
of  Officer. 


Notary  Public. 


OATH   OF   DIRECTOR 


State  of. 


ss : 


County  of. 


I,  the  undersigned.  Director  of  the of ,  in  the 

State  of ,  being  a  citizen  of  the  United  States,  and  resi- 
dent of  the  State  of ,  do  solemnly  swear  that  I  will,  so 

far  as  the  duty  devolves  on  me,  diligently  and  honestly  ad- 
minister the  affairs  of  said  Association  ;  that  I  M'ill  not  know- 
ingly violate,  or  willingly  peniiit  to  be  violated,  any  of  the 
provisions  of  the  Statutes  of  the  United  States  under  which 
this    Association   has  been   organized ;  and    that   I   am   the 

143 


Official  Forms 


owner,  in  good  faith  and  in  my  own  right,  of  the  number  of 
shares  of  stock  required  by  said  Statutes,  subscribed  by  me 
or  standing  in  my  name  on  the  books  of  the  said  Associa- 
tion ;  and  that  the  same  is  not  hypothecated,  or  in  any  way 
pledged  as  security  for  any  loan  or  debt. 


Place  of  Residence 


Subscribed  and  Sworn  to  this 

day  of ,  1 90—,  before  the  | 


undersigned,  a 
said  county. 


in  and  for  I 


Official  Seal 
of  Officer. 


Notary  Public. 


GENERAL  FORM  OF  BY-LAWS  OF  NATIONAL 

BANKS 


BY-LAWS  OF  THE  (HERE  INSERT  THE  TITLE  OF  THE 
BANK)    ORGANIZED    UNDER   THE    NATIONAL- 
BANKING  LAWS  OF  THE  UNITED  STATES 

ELECTIONS 

Section  1.  The  regular  annual  meetings  of  the  sharehold- 
ers of  this  bank  for  the  election  of  directors  shall  be  held  at 
its  banking-house  on  the  second  Tuesday  of  January  of  each 
year,  between  the  hours  of  10  and  4  of  said  day.  It  shall  be 
the  duty  of  the  board  of  directors,  within  one  month  prior  to 
the  time  of  said  election,  to  appoint  three  shareholders  to  be 
judges  of  said  election,  who  shall  hold  and  conduct  the  same, 

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and  Documents 


and  who  shall,  after  the  election  has  been  held,  notify  under 
their  hands  the  cashier  of  this  bank  of  the  result  thereof  and 
the  names  of  the  directors-elect. 

Sec.  2.  The  cashier,  upon  receiving  the  returns  of  the 
judges  of  the  elections  as  aforesaid,  shall  cause  the  same  to 
be  recorded  upon  the  minute-book  of  the  bank,  and  shall 
notify  the  directors-elect  of  their  election,  and  of  the  time  at 
which  they  are  required  to  meet  at  the  banking-house  of  the 
bank  for  the  purpose  of  organizing  the  new  board.  If  at  the 
time  fixed  for  the  meeting  of  the  directors-elect  there  is  not 
a  quorum  in  attendance,  the  members  present  may  adjourn 
from  time  to  time  until  a  quorum  is  secured;  and  no  business 
shall  be  transacted  prior  to  qualifying  by  taking  the  oath  of 
office  as  prescribed  by  law. 

Sec.  3.  If,  for  any  cause,  the  annual  election  of  directors 
is  not  held  on  the  date  fixed  in  the  articles  of  association, 
the  directors  in  office  shall  order  an  election  to  be  held  on 
some  other  day,  of  which  special  election  notice  shall  be 
given  in  accordance  with  the  requirements  of  section  5149, 
United  States  Revised  Statutes,  judges  appointed,  returns 
made  and  recorded,  and  the  directors-elect  notified,  accord- 
ing to  the  provisions  of  sections  one  and  two  of  these  by- 
laws. 

OFFICERS 

Sec.  4.  The  officers  of  this  bank  shall  be  a  president,  vice- 
president  (who  shall  be  members  of  the  board  of  directors), 
cashier,  and  such  other  officers  as  may  be  from  time  to  time 
required  for  the  prompt  and  orderly  transaction  of  its  busi- 
ness, to  be  elected  or  appointed  by  the  board  of  directors,  by 
whom  their  several  duties  shall  be  prescribed. 

Wo 


Official  Forms 


Sec.  5.  The  president  shall  hold  his  office  for  the  current  year 
for  which  the  board  of  which  he  shall  be  a  member  was  elected, 
unless  he  shall  resign,  become  disqualified,  or  be  removed  ; 
and  any  vacancy  occurring  in  the  office  of  president  or  in  the 
board  of  directors  shall  be  filled  by  the  remaining  members. 

Sec.  6.  The  cashier  and  the  subordinate  officers  and  clerks 
shall  be  appointed  to  hold  their  offices,  respectively,  during 
the  pleasure  of  the  board  of  directors. 

Sec.  7.  The  cashier  of  this  bank  shall  be  responsible  for 
all  the  moneys,  funds,  and  valuables  of  the  bank,  and  shall 
give  bond,  with  security  to  be  approved  by  the  board,  in  the 

penal  sum  of dollars,  conditioned  for  the  faithful  and 

honest  discharge  of  his  duties  as  such  cashier,  and  that  he 
will  faithfully  apply  and  account  for  all  such  moneys,  funds, 
and  valuables,  and  deliver  the  same  to  the  order  of  the  board 
of  directors  of  this  bank,  or  to  the  person  or  persons  author- 
ized to  receive  them. 

Sec  8.  The  president  of  this  bank  shall  be  responsible  for 
all  such  sums  of  money  and  property  of  every  kind  as  may 
be  intrusted  to  his  care  or  placed  in  his  hands  by  the  board 
of  directors  or  by  the  cashier,  or  otherwise  come  into  his 
hands  as  president,  and  shall  give  bond,  with  security  to  be 

approved  by  the   board,   in   the  penal   sum  of dollars, 

conditioned  for  the  faithful  discharge  of  his  duties  as  such 
president,  and  that  he  will  faithfully  and  honestly  apply  and 
account  for  all  sums  of  money  and  other  property  of  tlws 
bank  that  may  come  into  his  hands  as  such  president,  and 
pay  over  and  deliver  the  same  to  the  order  of  the  board  of 
directors,  or  to  any  other  person  or  persons  authorized  by  the 
board  to  receive  the  same. 

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and  Documents 


Sec.  9.  The  teller  shall  be  responsible  for  all  such  sums  of 
money,  property,  and  funds  of  evex-y  description  as  may,  from 
time  to  time,  be  placed  in  his  hands  by  the  cashier,  or  other- 
wise come  into  his  possession  as  teller ;  and  shall  give  bond, 
with  security  to  be  approved  by  the  board,  in  the  penalty  of 
dollars,  conditioned  for  the  honest  and  faithful  dis- 
charge of  his  duties  as  teller,  and  that  he  will  faithfully 
apply,  account  for,  and  pay  over  all  moneys,  property,  and 
funds  of  every  description  that  may  come  into  his  hands  by 
virtue  of  his  office  as  teller,  to  the  order  of  the  board  of 
directors  aforesaid,  or  to  such  person  or  persons  as  may  be 
authorized  to  demand  and  receive  the  same. 

SEAL 

Sec.  1 0.  The  following  is  an  impression  of  the  seal  adopted 
by  the  boaid  of  directors  of  this  bank  : 


Impression 
of  Seal. 


CONVEYANCE    OF    REAL    ESTATE 

Sec.  11.  All  transfers  and  conveyances  of  real  estate 
shall  be  made  by  the  association,  under  seal,  in  accordance 
with  the  orders  of  the  board  of  directors,  and  shall  be  signed 
by  the  president  or  cashier. 

increase  of  stock 
Sec.   12.  Whenever  an  increase  of  stock  shall  be  deter- 
mined upon,  in  accordance  with  law,  it  shall  be  the  duty  of 
the  board  to  notify  all  the  shareholders  of  the  same,  and  to 

147 


Official  For'ms 


cause  a  subscription  to  be  opened  for  such  increase  of  capi- 
tal. In  the  increase  of  capital  each  shareholder  shall  have 
the  privilege  of  subscribing  for  such  number  of  shares  of  the 
new  stock  as  he  may  be  entitled  to  subscribe  for,  according 
to  his  existing  stock  in  the  bank.  If  any  shareholder  fails 
to  subscribe  for  the  amount  of  stock  to  which  he  may  be 
entitled,  the  board  of  directors  may  determine  what  disposi- 
tion shall  be  made  of  the  privilege  of  subscribing  for  the 
unsubscribed  stock. 

BUSINESS    OF    THE    BANK 

Sec.   13.  This    bank  shall  be   opened  for  business  from 
o'clock  A.M.   to o'clock  P.M.   of  each  day  of  the 


year,  excepting  Sundays  and  days  recognized  by  the  laws  of 
this  State  as  holidays.  When  any  regular  weekly  meeting 
of  the  board  of  directors  falls  upon  a  holiday,  the  meeting 
shall  be  held  upon  such  other  day  as  the  board  may  pre- 
viously designate. 

Sec.  14.  The  regular  meetings  of  the  board  of  directors 
shall  be  held  on  the  (here  insert  time  of  meetings).  Special 
meetings  may  be  called  by  the  president,  cashier,  or  at  the 
request  of  three  or  more  directors,  and  should  there  be  no 
quorum  at  any  regular  or  special  meeting,  the  members 
present  may  adjourn  from  day  to  day  until  a  quorum  is  in 
attendance.  In  the  absence  of  a  quorum  no  business  shall 
be  transacted. 

Sec.  1 5.  There  shall  be  a  committee,  to  be  known  as  the 
discount  committee,  consisting  of  the  president,  cashier,  and 
directors,  appointed  by  the  board  every months,  to  con- 
tinue to  act  until  succeeded,  who  shall  have  power  to  dis- 

148 


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count  and  purchase  bills,  notes,  and  other  evidences  of  debt, 
and  to  buy  and  sell  bills  of  exchange  ;  and  who  shall,  at  each 
regular  meeting  of  the  board  of  directors,  make  a  report  of 
all  bills,  notes  and  other  evidences  of  debt  discounted  and 
purchased  by  them  for  the  bank  since  their  last  previous 
report. 

MINUTE    BOOK 

Sec.  16.  The  organization  papers  of  this  bank,  the  re- 
turns of  the  judges  of  the  elections,  the  proceedings  of 
all  regular  and  special  meetings  of  the  directors  and  of  the 
shareholders,  the  by-laws  and  any  amendments  thereto,  and 
reports  of  the  committees  of  directors  shall  be  recorded  in 
the  minute  book  ;  and  the  minutes  of  each  meeting  shall  be 
signed  by  the  president  and  attested  by  the  cashier. 

TRANSFERS    OF    STOCK 

Sec.  17.  The  stock  of  this  bank  shall  be  assignable  and 
transferable  only  on  the  books  of  this  bank,  subject  to  the 
restriction  and  provisions  of  the  national  banking  laws  ;  and 
a  transfer  book  shall  be  provided  in  which  all  assignments 
and  transfers  of  stock  shall  be  made. 

Sec  18.  Transfers  of  stock  shall  not  be  suspended  pre- 
paratory to  the  declaration  of  dividends  ;  unless  an  agree- 
ment to  the  contrary  shall  be  expressed  in  the  assignments, 
dividends  shall  be  paid  to  the  shareholders  in  whose  name 
the  stock  shall  stand  at  the  date  of  the  declaration  of  divi- 
dends. 

Sec  19-  Certificates  of  stock,  signed  by  the  president 
and  cashier,  may  be  issued  to  shareholders,  and  the  certifi- 
cate shall  state  upon  the  face  thereof  that  the  stock  is  trans- 

149 


Official  Forms 


ferable  only  upon  the  books  of  the  bank  ;  and  when  stock  is 
transferred,  the  certificates  thereof  shall  be  returned  to  the 
bank  and  cancelled,  and  preserved,  and  new  certificates  issued. 

EXPENSES 

Sec.  20.  All  the  current  expenses  of  the  bank  shall  be 
paid  by  the  cashier,  who  shall  every  six  months,  or  oftener 
if  required  to  do  so,  make  to  the  board  a  detailed  statement 
thereof. 

CONTRACTS 

Sec.  21.  All  contracts,  checks,  drafts,  etc.,  and  all  re- 
ceipts for  circulating  notes  received  from  the  Comptroller  of 
the  Currency,  shall  be  signed  by  the  president  or  cashier. 

EXAMINATIONS 

Sec.  22.  There  shall  be  appointed  by  the  board  of  direc- 
tors a  committe  of members,  whose  duty  it  shall  be  to 

exercise  a  supervision  of  the  business  of  the  bank,  and  to 
examine  every  three  months  the  affairs  of  the  bank,  count 
its  cash,  and  compare  its  assets  and  liabilities  with  the  ac- 
counts of  the  general  ledger,  ascertain  whether  the  accounts 
are  correctly  kept  and  the  condition  of  the  bank  corresponds 
therewith,  and  whether  the  bank  is  in  a  sound  and  solvent 
condition ;  and  to  recommend  to  the  board  such  changes  in 
the  manner  of  doing  business,  etc.,  as  shall  seem  to  be  de- 
sirable ;  the  result  of  which  examination  shall  be  reported  in 
writing  to  the  board  at  the  next  regular  meeting  thereafter. 

Sec.  23.  The  board  of  directors  shall  have  power  to 
change  the  form  of  the  books  and  accounts  when  deemed 
expedient,  and  define  the  manner  in  which  the  affairs  of  the 
bank  shall  be  conducted. 

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QUORUMS 

Sec.  24.  A  majority  of  all  the  directors  is  required  to 
constitute  a  quorum  to  do  business. 

Sec.  25.  These  by-laws  may  be  changed  or  amended  by 
the  vote  of  two-thirds  of  the  directors. 


OFFICIAL   SIGNATURES 

Official  signatures  of  the  President,  Vice-President,  Cashier, 

and  Assistant  Cashier  of  "  The National Bank  of 

"  appointed  at  a  meeting  of  the  Board  of  Directors  held 

on  the day  of ,  ipo — . 

[Original  signatures President. 

necessary.] 

Vice-President. 

. Vice-President. 

Vice-President. 

Cashier. 

Assistant  Cashier. 

Assistant  Cashier. 


Seal  of 
Bank. 


IMPORTANT 

This  paper  will  be  returned  for  correction  unless  these  directions 
are  followed  :  (1)  The  signatures  of  the  Vice-President  and  Assistant 
Cashier  must  be  given,  if  you  have  such  officers,  in  addition  to  those 
of  President  and  Cashier.  (2)  Write  the  word  "none"  where  the 
office  is  vacant.  (3)  Affix  the  seal  of  the  bank  in  the  place  desig- 
nated. (4)  Fill  in  the  title  of  the  bank,  and  be  careful  to  insert  date 
of  appointment  of  officers.  (5)  Properly  indorse  and  promptly  for- 
ward this  paper  to  the  Comptroller  of  the  Currency. 

151 


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CERTIFICATE    OF    PAYMENT    OF  FIRST    INSTAL- 
MENT   OF   CAPITAL   STOCK 

It  is  hereby  certified,  as  required  by  section  5140  of  the 
Revised  Statutes  of  the  United  States,  that  of  the  author- 
ized capital   stock  of  $ ,  of  The National  Bank  of 

, ,  organized  in  conformity  with  the  provisions  of 

the  banking  laws  of  the  United  States  authorizing  the  or- 
ganization of  national  banking  associations,  the  first  instal- 
ment, amounting  to  $ ,  has  been  paid  in  cash. 

,  President. 


or 

,  Cashier. 


State  of. 


>-  ss : 
County  of j 

Subscribed  and  sworn  to  before  the  undersigned,  a 
of  the  said  county,  this  day  of ,  1 90 — . 


Seal.         ; 

(Official  title). 


152 


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CERTIFICATE  OF  PAYMENT    OF   CAPITAL  STOCK 
The    Bank  1 


1 


.,  190- 


To  THE  Comptroller  of  the  Currency, 

Washington,  D.  C. 

Sir  :     It    is    hereby    certified    that    the  instahnent, 

dollars  ($ ),  has  been  paid  in  on  account  of  the 

Capital  Stock  of  The ,  the  certification  of  payments  to 

date  being  as  follows  : 

First  instalment  (at  organization) $ 

Second       "  

Third  "  

Fourth        "  

Fifth  "  

Sixth  «  

Total 


Cashier. 
State  of "\ 

>■  xs  : 
County  of ) 

Subscribed  and  sworn  to  before  the  undersigned of 

the  said  County,  this day  of ,  1 90 — . 

'-  Official  Seal  '• 

:   of  Officer.  : 


Do  not  include  in  certificate  a  fraction  of  a  dollar. 

153 


Officinl  Forms 


CHARTER 
TREASURY  DEPARTMENT 

Office  of  Comptroller  of  the  Currency  : 

Washington,  D.  C, 190 — . 

Whereas,  by  satisfactory  evidence  presented  to  the  under- 
signed, it  has  been  made  to  appear  that in  the of 

in  the  County  of and  State  of has  complied 

with  all  the  provisions  of  the  Statutes  of  the  United  States, 
required  to  be  complied  with  before  an  association  shall  be 
authorized  to  commence  the  business  of  Banking : 

Now  therefore  I, Comptroller  of  the  Currency,  do 

hereby  certify  that in  the of in  the  County 

of and  State  of  is  authorized   to   commence   the 

business  of  Banking  as  provided  in  Section  Fifty-one  hun- 
dred and  sixty-nine  of  the  Revised  Statutes  of  the  United 
States. 

In  testimony  whereof  witness  my  hand  and 
Seal  of  office  this day  of 190 


Comptroller  of  the  Currency. 


154 


and  Documents 


OATH    OF   PUBLICATION 


State  of. 


M, 


County  of 

Cut  the  printed  notice  from  the  news- 
paper and  attach  here. 


Forward  notice  to  Comptroller  of  Cur- 
rency as  promptly  as  possible. 


being  first  duly  sworn,  de- 
poses and  says  that  he  is 

the    publisher    of  a 

newspaper  published 

in  the of County 

of ,  State  of and 

that  the  annexed  adver- 
tisement of  the  Comptrol- 
ler's certificate  authorizing 
the to  begin  the  busi- 
ness of  banking  has  ap- 
peared in  each  issue  of  said 
paper  for  a  period  of  at 
least  sixty  days,  beginning 

the day  of ,  and 

ending    the   day    of 

190—. 


Subscribed  and  sworn  to  before  me,  a 
State  and  County  aforesaid,  this  — 


—  in  and  for  the 
day  of ,  190—. 


Seal  of 
Officer. 


155 


Official  Forms  and  Documents 


STOCKHOLDERS'  PROXY 

KNOW  ALL  MEN   BY  THESE  PRESENTS 

That of do  hereby  constitute  and  appoint 

and of or  either  of  them, attorneys  or  at- 
torney,  and  agents   or    agent    for ,  and  in name, 

place  and  stead,  to  vote,  as proxy,  at Meeting  of 

Shareholders  of  the Bank  of ,  to   be   held   at  its 

Banking    House,   No.  Street,  in    the   City   of ,  on 

the of  ,   19O-,  between    the  hours  of 

and o'clock,  and  at  any  adjourned  meeting  of  the  said 

Sliareholders,  for  the and  the  transaction  of  such  other 

business  as  may  be  brought  before  the  said  meeting,  accord- 
ing to  the  number  of  votes  that should  be   entitled  to 

vote  if  then  personally  present,  with  full  power  of  substitu- 
tion and  revocation   to   each   of said  attorneys,  hereby 

ratifying  and  confirming  all  that said  attorneys  or  at- 
torney, or  their  or  his  substitutes  or  substitute,  shall  lawfully 
do  or  cause  to  be  done  by  virtue  hereof. 

In  witness  whereof, have  hereunto  set 


hand  and  seal  this day  of 1 90 — . 


Seal. 


Sealed  and  delivered 
in  presence  of 


156 


CONVERSION   OF   STATE   BANKS 

AUTHORITY  FOR   CONVERSION   OF  STATE   BANK 

We^  the  undersigned  stockholders  of  The located  in 

the ,  county  of ,  State  of ,  having  a  capital  of 

dollars,  do  hereby  authorize  and  empower  the  Directors 

thereof  to  change  and  convert  said  bank  into  a  National 
Banking  Association  under  the  provisions  of  section  5 154  of 
the  Revised  Statutes  of  the  United  States,  or  of  acts  amenda- 
tory thereof;  and  we  do  also  authorize  the  said  Directors,  or 
a  majority  thereof,  to  make  and  execute  the  Articles  of 
Association  and  Organization  Certificate  required  to  be  made 
or  contemplated  by  said  Statutes  ;  and  also  to  make  and 
execute  all  other  papers  and  certificates,  and  to  do  all  acts 
necessary  to  convert  the  said  bank  into  a  National  Banking 
Association,  and  to  do  and  perform  all  such  acts  as  may  be 
necessary  to  transfer  the  assets  of  every  description  and 
character  of  the  said  State  Bank  to  the  National  Banking 
Association  into  which  it  is  to  be  converted,  so  that  the  said 
conversion  may  be  absolute  and  complete  ;  and  we  do  hereby 
assume,  and  authorize  the  said  Directors  to  assume,  as  the 
name  of  the   National    Banking  Association   into   which  the 

said  State  Bank  is  to  be  converted,  "The ; "  and  we  do 

hereby  appoint ,  who  are  now  the  Directors  of  the  said 

State  Bank,  to  be  the  Directors  of  the  said  National  Bank,  to 

157 


Official  Forms 


hold  their  offices  as  such  Directors  until  the  regular  annual 
election  of  Directors  is  held,  pursuant  to  the  provisions  of 
said  Revised  Statutes,  and  until  their  successors  are  chosen  and 
qualified ;  and  we  do  hereby  authorize  the  said  Directors  of 
the  said  National  Bank  to  continue  in  office  the  officers  of  the 
said  State  Bank,  or  to  appoint  or  elect  others,  as  to  them 
may  seem  best. 

In  Witness  Whereof,  we  have  hereunto  set  our  hands  and 
written  against  our  names  the  number  of  shares  owned  by 
us,  respectively,  this day  of a.d.  190 — . 


Signatures  of  Stockholders. 


No.  of  Shares  Owned  by  Each. 


APPLICATION  TO  CONVERT  A  STATE  BANK  INTO 
A   NATIONAL   BANKING   ASSOCIATION 


190—. 


To  THE  Comptroller  of  the  Currency, 

Washington,  D.  C. 

Sir :    Notice    is  hereby  given  that  we,   the  undersigned, 

being  a  majority  of  the  board  of  directors  of  "The ," 

158 


and  Documents 


having  a  paid-in  and  unimpaired  capital  of  % ,  intend  to 

convert  the  said  bank  into  a  National  Banking  Association, 
in  accordance  with  the  provisions  of  Section  5154  of  the  Re- 
vised Statutes  of  the  United  States,  under  the  title  "  The 
,"  to  be  located  at ,  County  of ,  State  of , 


with  capital  of  $ . 

We  request  that  the  title  be  reserved  for  a  period  of  sixty 
days  and  the  necessary  conversion  papers  and  instructions 
sent  to at 


Signatures  of  Directors. 


Residences. 


ARTICLES   OF   ASSOCIATION 

We,  the  undersigned.  Directors  of  the ,  having  been 

authorized  by  the  owners  of  two-thirds  of  the  Capital  Stock 
of  said  Bank  to  change  and  convert  the  said  Bank  into  a 
National  Banking  Association,  under  the  provisions  of  Sec- 
tion 5154  of  the  Revised  Statutes  of  the  United  States,  or 
of  acts  amendatory  thereof,  and  to  execute  Articles  of  Asso- 
ciation, do  hereby,  in  our  own   behalf,  and   in  behalf  of  the 

159 


Official  Forms 


Stockholders   whom   we   represent,   make  and    execute   the 
following  Articles  of  Association  : 

First.  The   title   of  the  Association  into  which   the   said 
State  Bank  is  to  be  changed  and  converted  shall  be  "  The 

it 

(Care  should  be  taken  to  state  exact  title,  including  name  of  City, 
but  not  of  State.) 

The  remaining  articles  may  be  in  the  same  form  as  the 
Articles  of  Association  given  on  page  136. 


ORGANIZATION  CERTIFICATE 

We,  the  undersigned,  Directors  of  The ,  having  been 

duly  authorized  by  the  owners  of  two-thirds  of  its  capital 
stock  to  change  and  convert  said  Bank  into  a  National 
Banking  Association,  and  to  make  the  necessary  Organization 
Certificate,  under  the  provisions  of  Section  5154  of  the  Re- 
vised Statutes  of  the  United  States,  or  of  acts  amendatory 
thereof,  do  sign  and  execute  the  following  Organization  Cer- 
tificate, which  we  hereby  declare  we  are  authorized  to  make 
by  the  owners  of  two-thirds  of  the  capital  stock  of  the  said 
State  Bank. 

First.   The  title   of  this  Association  shall   be  "The ." 

(Insert  exact  title  of  bank,  including  the  name  of  town,  but  not 
that  of  State. ) 

Second.   The   said  Association   shall  be  located  and   con- 
tinued   in   the of ,    County   of and    State    of 

160 


and  Documents 


-,  where  its  operations  of  discount  and  deposit  are  to  be 


carried  on. 

(In  giving  the  name  of  the  proposed  location  of  the  bank,  indicate 
whether  the  place  is  a  "Village,"  "Town,"  or  "City."  Also  give 
the  names  of  County  and  State. ) 

Third.   The  capital  stock  of  this  Association  shall  be • 

dollars  ($ ),  divided  into shares  of dollars  each, 

as  it  is  now  divided  in  the  said  State  Bank. 

(In  this  section  care  should  be  taken  to  give  both  the  amount  of 
capital  of  the  bank  and  the  number  of  shares  into  which  this  capital 
is  divided.) 

Fourth.  The  name  and  residence  of  each  of  the  stock- 
holders of  the  said  State  Bank,  which  is  to  become  a  National 
Bank  under  the  provisions  of  the  Revised  Statutes  aforesaid, 

and  the  number  of  shares  of dollars  each,  held  by  each 

stockholder,  are  as  follows  : 


Name. 

Residence. 

No.  of 
Shares. 

Fifth.  The  certificate  is  made  in  order  that  the  said  State 
Bank  and  the  stockholders  thereof,  may  avail  themselves 
of  the  advantages  of  the  aforesaid  Revised  Statutes,  and 
that  the  said  State  Bank  may  be    changed   and  converted 

161 


Official  Forms 


into  a  National   Banking   Association,  under  the   foregoing 
title. 

In  witness  whereof,  we  have  hereunto  set  our  hands  this 
day  of ,  nineteen  hundred  and . 


(The  signature  of  the  directors  on  this  page.) 

State  of_ . 

_  ss . 
County  of_ 


Before  the    undersigned,   a of ,   personally  ap- 
peared  


Directors  of  the  aforesaid  State  Bank,  to  me  well  known,  who 
severally  acknowledged  that  they  executed  the  foregoing 
Certificate  for  the  purposes  therein  mentioned. 

Witness  my  hand  and  seal  of  office  this day  of , 

190—. 


Official  Seal 
of  Officer. 


CERTIFICATE    RELATIVE   TO  PAYMENT  OF  CAPI- 
TAL  STOCK    OF   STATE    BANK    CONVERTING 
INTO    NATIONAL   BANK 

It  is  hereby  certified,  that  The Bank of 


-,  which    is    to   be  converted  into   "  The National 

-  Bank  of ,"  in  conformity   with   the  provisions  of 

162 


and  Documents 


section  5154  of  the  Revised  Statutes  of  the  United  States, 
authorizing  the  conversion  of  "  any  bank  incorporated  by 
special  law  or  any  banking  institution  organized  under  a 
general  law  of  any  State,"  has  a  paid-in  and  unimpaired 
capital  of  $ . 


or 


_,  President. 
_,  Cashier. 


State  of_ 

ss 


County  of 

Subscribed  and  sworn  to  before  the  undersigned,  a of 

the  said  county,  this day  of ,  1 90 — . 


(Official  title)- 


163 


CIRCULATION 

RESOLUTIONS    AUTHORIZING   WITHDRAWAL   OF 
ONE  ISSUE  OF  BONDS  AND  SUBSTITU- 
TION OF  ANOTHER 


19— 


At  a  meeting  of  the  board  of  directors   of  the Bank 

of ,  held  at  their  banking  house ,  1 9 — ,  the  follow- 
ing resolutions  were  adopted  : 

"  Resolved,  That  the   Comptroller  of  the  Currency   be, 

and  is   hereby,  authorized  to  withdraw  $ U.  S.  bonds, 

Act   of ,  ,   deposited    with    the    Treasurer    of   the 

United  States  to  secure  circulation,  and  to  substitute  there- 
for $ U.  S.  bonds,  Act  of , . 

"  Resolved,  That  the be,  and  is  hereby,  authorized  to 

sell,  assign,  and  transfer  the  said  % U.  S.  bonds.  Act  of 

J  ,  and  to  appoint  one  or  more  attorneys  for  that 

purpose." 

I  hereby  certify  that  the  above  is  a  true  extract  from  the 
minutes  of  said  meeting. 


Cashier,  and  Secretary  of  the  Board  of  Directors. 


Seal  of 
Bank. 


164 


Official  Foi'ms  and  Uocuments 


ORIGINAL   ORDER    FOR   PLATES  AND  CIRCU- 

LATION 

Charter  No. . 


-National- 


Bank  OF- 


To  THE  Comptroller  of  the  Currency. 

Sir  :  You  are  requested  to  have  plates  engraved  for  this 
bank,  the  cost  to  be  paid  upon  demand,  and  circulating  notes 
printed  therefrom  as  follows  : 


Cost  of 
plates. 


$73 
75 
50 


No.  of 
sheets  or- 
dered. 


Denominations  on  sheets. 


$5,  $5,  f  5.  |5   . . . . 
$10,  $10,  $10,  II^O 
$50,  $100    


Total. 


Value 

per 
sheet. 


$90 

50 

150 


Amount  of 
circulation. 


Respectfully, 


Cashier. 


165 


Official  Fo7'ms 


SUPPLEMENTARY    ORDER   FOR   CIRCULATION 
Charter  No. . 


To  THE  Comptroller  of  the  Currency. 

Sir  :  You  are    requested    to  have   printed  for  this  bank 

circulating    notes  in  blank  to  the  amount  of  dollars, 

and  of  the  following  denominations  : 


No.  of 
Sheets. 


Plates. 


Sheets,  $5,  $5,  $5,  $5 .  .  ($20  per  sheet) 
Sheets,  $10,  $10,  $10,  $20  ($50  per  sheet) 
Sheets,  $50,  $100 ($150  per  sheet) 

Total 


Amount. 


Respectfully, 


Cashier. 


SEMI-ANNUAL    RETURN    OF   CIRCULATION 
SUBJECT   TO   DUTY 

Return  of  the  average  amount  of  Notes  of  the Na- 
tional   Bank  of  ,  State  of  ,  in  circulation  for 

the  Six  Months  next  preceding  the  first  day  of ,  190     , 

with  the  duty  thereon,  made  pursuant  to  the  provisions  of 
Section  5215,  Revised  Statutes  of  the  United  States,  and  the 
act  of  March  14,  1900,  in  order  to  enable  the  Treasurer  of 

166 


and  Documents 


the  United  States  to  assess  the  duty  on  circulation  imposed 
by  Section  5214  of  said  statutes,  as  amended  by  Section  1  of 
"  An  act  to  reduce  internal-revenue  taxation  and  for  other 
purposes/'  approved  March  S,  1883,  and  the  said  act  of 
March  14,  1900. 

Amount  of  Circulating  Notes  received  from  the 

Comptroller  of  the  Currency $ 

Average  amount  of  Notes  in  circulation  for  the 
period  based  on  U.  S.  two  per  cent  Consols 
of  1930 $ 

Duty  on  Average  amount  of  Notes  in  circulation  based 
on  U.  S.  two  per  cent  Consols  of  1930,  at  one-fourth 
of  one  per  cent $ 

Average  amount  of  Notes  in  circulation  for  the 
period  based  on  any  or  all  other  U.  S. 
Bonds % 

Duty  on  Average  amount  of  Notes  in  circulation 
based  on  all  other  U.  S.  Bonds  at  one-half  of  one 
per   cent $ 

Total  amount  of  duty $ 

I, ,  of  the  above-named  National  Bank,  do  sol- 
emnly swear  that  the  above  is  a  true  statement  of  the 
Average  amount  of  the  Notes  of  said  Bank  in  circulation  for 
the  time  named. 


Subscribed  and  sworn  to  before  me  this 
day  of ,  190     . 


167 


Official  Forms  and  Documents 


STATEMENT   OF   BONDS    OF   NATIONAL   BANKS 

HELD    FOR   SECURITY   OF   CIRCULATION 

AND    PUBLIC    MONEY 


Organization  No. 


The  following  Statement  of  the  United  States  Bonds  held 

by  the  Treasurer  of  the  United  States  in  trust  for  the  

National Bank  of on  the day  of ,  1 90     , 

as  shown  by  books  of  the  said  Association,  is  furnished  for 
use  in  the  examination  and  comparison  of  said  Bonds  re- 
quired to  be  made  annually  by  Section  5166  of  the  Revised 
Statues  of  the  United  States  : 


Kinds  of  Bonds. 


2  per  cent  Consols  of  1930 

3  per  cent  Loan  of  1908-1918  . . . 

4  per  cent  Funded  Loan  of  1907 . 

4  per  cent  Loan  of  1925 

5  per  cent  Loan  of  1904 

Total 


Amount  of 
Bonds  Held 
for  Security 
of  Circulat- 
ing Notes. 


Amount  of 

Bonds  Held 

for  Security 

of  Public 

Money. 


Correct,  as  to  Bonds  held  for ' 
Security    of  Circulating 

Notes. 


For  Comptroller  of  the 
Currency. 


Cashier. 


168 


BANK    RESERVES 

FORMS    FOR   CALCULATING    RESERVE 

■•  Bank  DlrMtore  vhouM  bemr  ht  mtad  Uuit  Section  5191.  U-  S.  Rffv1s«d  statutM.  fortlda  >  Bonk  to  hcrtAst  lu  IbbUltlu  by  oew  touu  Of 
dlscouots.  or  to  dedu-«  uiy  dlvUead  when  Its  Reserve  la  below  the  legiU  r«qulrcinent. 


FORM  A.-CALCULATION  OF  THE  LAWFUL  MONEY  RESERVE  OF  NATIONAL  BANKS  LOCATED 
IN  RESERVE  dTIES  AND  CENTRAL  RESERVE  QTIES. 


No.  of  Bank 

Located  at  ._ 


Report  of  the  state  of  lawfol  money  reeerve  of  the  . 
.- ,  State  of 


-o'clock m  . 


N.  B.— If  this  accompanieB  a  Report  of  Condition  it  Bhould  be  si^ed  by  ..    .,..,._ 
If  it  Accompanies  a  Report  of  Examination  it  should  be  signed  by __„ 


,  Cashier 

..^  Examiner. 


ITEMS  ON  WHICH  RESERVE  IS  TO  BE  COMPUTED. 


Bhonld  tbo  Af;;r«gat«  "Dtm 
trom"  e»c<j«d  the  aggre 
ffat»  "Doa  to"  Banka 
both  lt«m9  muBt  b«  omit 
led  [n>m  the  calciUatioD 


Due  to  National  Banks 

Due  to  State  Banks  and  Bankers.  - . 
Due  to  Trust  Companiee,  etc 

Due  from  other  NatioDal  Banks 

Due  from  State  Banks  and  Bankers. 


Dividends  unpaid 

Individual  Deposits 

Uoited  States  Deposita 

Deposits  of  U.  S.  Disbursing  Officers  . 

Gross  amount 

DEDUCTIONS  ALLOWED. 
Checks  on  other  Banks  in  the  name  plaoe. . . . 

Exchanges  for  Clearing  Hoaae 

Kational  Bank  Notes 


Twenty-five  per  cent  of  this  total  amountfy 

Is  the  entire  Reserve  required,  which  is     , 

Deduct  6  per  cent  Redemption  Fund  with  Treasurer  U.  9 
Nftt  Reacrve  to  be  held. 


ITEMS  COMPOSING  THE  NET  RESERVE  AND  THE  DISTRIBUTION  OF  THE  SAME. 


One-half  of  tlie  Net  Reserve  is 

lUnns  making  up  the  aame  may  consist 
of"  Balance*! with  following  approved 
Koaerve  Agenta,  viz: 


EiceMwitfa  Reserve  AgenU.. 

Doficieooy  with  Reserve  Agent*....  i 

Eicf«e  in  tbo  entiro  Resorvo  held.  9  ., 


One-hai;  of  the  Not  Reserve  ia 

Items  in  Bank's  poesedslon  to  moke  up 
same,  vii; 

the 

Fractional  Silver 

Silver  Dollars 

Silver  Treasury  Cert's. . 

Gold  Com 

Gold  Treasury  Cort's. . . 
LogHl-Teodor  Nolw 



= 

IT   S   Curl's  of  DofMjsit 

CB  Urfi  br  Cm  ul  ^tl  TiBtrn 

Excess  in  it«ms  bold 
DoBcicDoy  in  items  \ 

by  the 
lolii  l>T 

Bank  .. 
UioBuil 

k.... 

RECAPITULATION. 
...._  DeGcioDCy  in  the  •ntiro  Reeerre  bold,  •_ 


*  If  rtclpnxAt  ftpctiuou  »n  k«pl  with  nmm  Aff^ntk.  only  tb*  fi*f  unoont  do«  tnm  racb  acvnts  te  sniUbU  f->r 

N    P  — rUnko  \n  Nf<i«  Toik  C\Xj  nod  tn  ett\M  h»ornitnK  OotZAl  Rjonrre  Olli*  tithW  ttw  act  of  Uttcb  H,  IW7,  aaat  k«wp  \h»  vboU  Ml  R«a»n«  nqolra^ 

m  tm  nrtftitxal  Ki  ndr.im,  In  lirlr  'iwn  piiMMMMl OH 

Ikak  •■iH*  aUl  •I'W  *i-"*  >•  UMt  a«*M*  1  CMdltl*a  •■•  W  lkM>  hra>  •M»«l|  aiM  !•>.  **4  Buk  t»»la»«  Bill  ••  U*  ■■•  U  lUli  -  ii  r  t/  •■ • — "" 


1()1) 


Official  Forms  and  Documents 


CT-  Bulk  Uncten  aboaU  hear  to  oih»<J  U»al  Scxtloa  5igi .  U.  S-  Re^^wrf  SUtnU*.  fortldj  ■  Bnik  to  IncreMa  It*  tUbUldM  by  mw  loam  or 
dUcounU.  bi-  to  declare  uiy  dlvldeod  wbea  Its  ke«crv«  Is  below  the  le^aJ  nqulremcut. 


FORM  a— CALCULATION  OF  THE  LA\XTTJL  MONEY  RESERVE  OF  NATIONAL  BANKS  LOCATED 
ELSEWHERE  THAN  IN  RESERVE  CITIES  AND  CENTRAL  RESERVE  CITIES. 


Report  of  the  state  ol  l»w(ul  money  reserve  of  the  - 
,  State  of . 


H    B. — If  thi»  actompauiee  b  Eeport  of  Goodition  It  ehould  be  Bigned  by  „ 
If  it  ftccompaniefl  a  Report  of  EiaoiinatioD  it  ebouM  be  Bi^ed  by  , 


_  Examina^. 


ITEMS  ON  WHICH  RESERVE  IS  TO  BE  COMPUTED. 


froio  ■  eic«»J  Uii*  Wife'™ 

Kle      '  l>u^    to       Bon  )u. 
tb  Ituou  fuiul  be  uDilt 
••d  trota  U.»  aatouUUoa. 


Due  to  National  Banks 

Du<»  U>  State  Banks  and  Bankura.  . . 
Due  to  Trust  Companies,  etc ...... 

Due  to  approved  Reserve  A^otA 

Due  from  other  National  Baoka. . . 
Due  from  State  Banks  and  Baukere 


Divid'juds  unpaid 

Lndiv-idual  Deposite 

United  States  Depoaita 

Depoaitfi  of  U   8.  Diabureln^  Officers  . 

Otom  amount 

DEDUCTIONS  ALLOWED. 

Checks  CD  other  Banks  id  the  eame  place. .. . 

Exchangee  for  Clearing  House 

national  Bank  Nqc«8 


Flfteeo  per  cent  of  Uiis  amounttsy" 

ia  the  eutire  Reserve  required,  which  ia 

Deduct  6  per  cent  Redemption  Fund  with  Treaaurer  U  8. 
Net  Reserve  to  be  held , 


ITEMS  COMPOSING  THE  NET  RESERVE  AND  THE  DISTRIBUTION  OF  THE  SAME. 


Three-fifths  of  the  Net  Reserve  is.    

Items  making  up  the  same  may  consist 
of*  Balances  with  following  approved 
Roeerve  Ageote,  ^iz 


EiCftM  with  Reserve  AgenU 

De&ciency  with  Reeerve  Agents 


Items  in  Bank  which  may  lawfully  make  up 

Silver  Dollars 

Silver  Treasury  Cert's. . 

Gold  Coin 

Gold  Tr«asury  Oer^. . . 

Legal-Tender  Notes 

U.  S.  Cert's  of  Deposit 





,._... 

CH.Cert'il»C»uulli2t]-Ta4tn. 

1 

Deficiency  in  the  two-fifthfl  Reserve  1 

M 

Excees  in  the  enure  Reserve  held,  I 


RECAPITULATION. 

Detic;tacy  io  the  entire  Reserve  held,  t_ 


•  U  r»ctr"XL»l  uyy>Qfit«  kr»  kept  with  natnft  agtatt.  onljr  ibe  ti«l  uaoont  dne  froni  Bccb  agsnU  1»  »vailBbl«  far  r»Mi« 


170 


GOVERNMENT   DEPOSITS 

CERTIFICATE   OF   DEPOSIT 


• 

Form  1— Nailons)  Banks. 

0^5.:  V-     •  .-  j         ?'Ae  ;/a^tona/  C%  5anA  of  New  York. 

■J 

New  York,  N.  Y.,..- 190 

-1 

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2  certifu  tAa/  ..^ _.. 

5° 

/.oi //ui  </ay  y,^/fe/ (o  Mi  "i^iM^  Y e4i    TREASURER    OF   THE   UNITED  STATES 

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to 

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m 

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Form  I— Nation*]  Banks. 


^fe;  ;^    ,/  ,  j  The  National  City  Bank  of  New  York. 

New  York,  N.  Y.. 190 

g  ccrtifjj  /■/a/' _ _ _ 

/.„!  </u  Jay  y^MUeJ to  t4«  '^ieJa  Y <A«    TREASURER    OF    THE   UN4TED  STATES 

__ -...._ _ _ m^au^ 

ofi  accoun/  {4r  


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Cashier. 


UJ 

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THf    DEPOaiTOft   WILL  RETAIN   THIS    FOR    HIS   OWN 
use  AND  SECURITY. 

Form   l-Nallonol   Elanka^ 

of  New  York, 

190 

'fjfmijjl^^          The  National  City  Bank 

New  York,  N.  Y.,..- 

%  cctrtifg  f/(a^                      

/ik.  //,:,  ,/uy  ^<«/«/<}.  /At  'ifi<x^  /(Ae  Treasurer  of 

THE  United 

States 

yCi  u-A4cA  t^  navt  Myita  tij^uc<i/«  Uoei^. 

'  ^         '  .                                          .-nn 

Caihttr. 

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173 


Official  Forms 


WEEKLY   REPORT   OF   DEPOSITS 

(These  lists  must  be  rendered  to  the  Secretary  of  the  Treasury  and 
Treasurer  of  the  United  States  on  Saturday  of  each  week,  and  an 
additional  set  on  the  last  day  of  each  month,  except  when  the  month 
ends  on  Saturday.) 

List  of  Balances  standing  to  the  Official  Credit  of  Disburs- 
ing and  other  Officers  of  the  United  States  on  the  books  of 

the at   the  close  of  business  on ,  the day  of 

,  190—. 


Rank. 

Name. 

Department  or 
Branch  of  Ser- 
vice to  which 
the  Officer  prop- 
erly belongs. 

Capacity  in 
which  the  Of- 
ficer is  acting 
and  disburs- 
ing money. 

Amount  on 

Deposit  to 

the  Officer's 

Official 

Credit. 

174 


and  Documents 


MONTHLY   REPORT   OF   DEPOSITS 


To- 


Washington,  D.  C. 

(A  separate  list  should  be  rendered  for  the  deposits  of  each  officer 
for  each  account.) 

List  of  Deposits   made   with  the National   Bank  at 

,  State  of ,  to   the   credit  of  the  Treasurer  of  the 


United  States,  for  receipts  on  account  of ,  for  the  period 

ended ,  190—. 


Date. 

No.  of  CD. 

Depositor. 

Amount. 

Total. 

175 


Official  Forms 


DAILY    REPORT   OF    DEPOSITS 


To  be  made  out  and  forwarded  at  close  of  business  each  day. 
(May  report  by  postal  card,  form  on  next  page,  if  preferred.) 


National- 


-Bank, 


-,  190 


Aggregate  deposits  to  credit  of  Treasurer 
U.  S.  received  this  day  .  .  .      % 

Aggregate  balance  to  credit  of  Disbursing 
Officers  this  day  .  .  .  .      ^ 


Payments  this  day 


Transfer  of  Deposits. 
Treasury  Warrants  . 
Counter  Entries. 


To  Treasurer  U.  S., 

Washington,  D.  C. 


Cashier. 


176 


and  Documents 


DAILY    REPORT   OF    DEPOSITS 


NATIONAL   BANK, 


Aggregate    deposits   to   credit  of    Treasurer 
U.  S.  received  this  day,         .         .         .      ^ 

Aggregate   balance  to   credit   of   Disbursing 
Officers  this  day,  .         .         .         .      $ 


Payments  this  day 


Transfer  of  Deposits, 
Treasury  Warrants, 
Counter  Entries,  . 


To  Treasurer  U.  S., 

Washington,  D.  C. 


.Cashier. 


177 


Official  Forms  and  Documents 


DATES   FOR   RENDERING   TRANSCRIPTS 
Treasury  Department, 

OFFICE    OF   THE 

TREASURER  OF  THE  UNITED  STATES. 

Washington,  November  14,  1903. 
The  following  is  a  list  of  the  dates  on  which  transcripts  of 
accounts  current  should  be  rendered  to  the  Secretary  of  the 
Treasury  and  the  Treasurer  of  the  United  States  during  the 
year  1 904  : 


-Taniiarv          

9 

16 

23 

<?0 

ppbriiarv 

6 

13 

20 

29 

March 

5 

12 

19 

31 

April 

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16 

23 

30 

May          

7 

14 

21 

31 

June 

4 

11 

18 

30 

July     

9 

16 

23 

30 

AiifTiist: 

6 

13 

20 

31 

Spntpmber       

10 

17 

24 

30 

October 

8 

15 

22 

31 

November 

5 

12 

19 

30 

December 

10 

17 

24 

31 

178 


NOTICE    OF    SHAREHOLDERS' 
MEETING 

FORM    OF   NOTICE 
The National  Bank  of 


(Date.) 


Dear  Sir : Meeting  of  the  Shareholders  of  this  Bank, 

for  the and  the  transaction  of  such  other  business  as 

may  be  brought  before  it,  will  be  held  at  its  Banking  House, 
No.  Street,  on at . 

If  unable  to  be  personally  present  at  the  meeting,  please 
sign  and  return  in  the  inclosed  envelo})e  the  attached  proxy, 
duly  witnessed. 

Yours  respectfully. 


President. 
(See  page  1 .56  for  form  of  proxy.) 


179 


EXTENSION    OF    CORPORATE 
EXISTENCE 

A* 

REQUEST    FOR    APPROVAL   OF   AMENDMENT   OF 
THE   ARTICLES   OF   ASSOCIATION,    EXTEND- 
ING  CORPORATE   EXISTENCE   OF 
NATIONAL   BANK 


-National Bank- 


,  190— 

To  THE  Comptroller  of  the  Currency, 

Washington,  D.  C. 

Sir  :  The  Comptroller  of  the  Currency  is  hereby  requested 
to  approve  the  inclosed  amendment  of  the  Articles  of  Associa- 
tion of  this  bank,  extending  its  corporate  existence  for  twenty 
years,  pursuant  to  the  Act  of  Congress  entitled  "  An  Act  to 
enable  National  Banking  Associations  to  extend  their  corpo- 
rate existence,  and  for  other  purposes,"  approved  July  12, 
1882,  or  any  amendment  of  said  act,  there  being  affixed  to 
the  inclosure  the  certificate  required  by  law. 

Respectfully, 


President  or  Cashier. 
180 


Official  Forms  and  documents 


AMENDMENT    OF   ARTICLES    OF    ASSOCIATION 
OF   NATIONAL   BANK 

NATIONAI BANK 


In  accordance  with  and  in  pursuance  of  the  provisions  of 
"  An  Act  to  enable  National  Banking  Associations  to  extend 
their  corporate  existence,  and  for  other  purposes,"  approved 
July   12,  1882,  we,   the  undersigned   shareholders   of  "The 

,"  located  at in  the  County  of and  State  of 

owning  the  number  of  shares  of  the  capital  stock  of  said 


Association  set  opposite  our  respective  names,  aggregating 
not  less  than  two-thirds  of  the  stock  of  said  Association,  the 
total  number  of  shares  representing  the  capital  stock  of  said 

National  Banking   Association  being shares,  do  hereby 

consent  and  agree  that  the article  of  the  Articles  of  As- 
sociation of  said  National  Banking  Association  be,  and  is 
hereby,  amended  to  read  as  follows  : 

"  This   Association    shall   continue   until  close  of  business 

on ,  19 — ,  unless   sooner  placed  in  voluntary  liquidation 

by  the  act  of  its  shareholders  owning  at  least  two-thirds  of 
its  stock,  or  otherwise  dissolved  by  authority  of  law." 

In  witness  thereof,  we,  the  undersigned,  have  hereto  set 
our  hands. 


Date  of 
Signing. 

Name. 

Address. 

Proxy. 

No.  of 
Shares. 

1 

0 

9 

181 


Official  Forms 


PROXY    FOR    USE    IN    EXTENDING    CORPORATE 
EXISTENCE  OF   A  NATIONAL  BANK 

Know  all   men  by  these   presents,  that   I, ,  of , 


hereby  constitute  and  appoint  irrevocably  • my  true  and 

lawful  attorney,  for  me  and  in  my  name  and  stead  to  sign 
all  necessary  papers  in  connection  with  the  extension  of  the 

corporate  existence  of  the ,  under  the  act  of  Congress 

approved  July  12,  1882,  or  any  amendment  of  said  act,  and 
I  hereby  consent  that  the article  of  the  articles  of  as- 
sociation of  the ,  be  so  amended  as  to  read  as  follows  : 

"This  association  shall  continue  until  close  of  business 
on  — — ,  unless  sooner  placed  in  voluntary  liquidation  by 
the  act  of  its  shareholders  owning  at  least  two-thirds  of  its 
stock,  or  otherwise  dissolved  by  authority  of  law." 

I  further  grant  unto  my  said  attorney  full  power  and  au- 
thority to  act  in  and  concerning  the  premises  as  fully  and 
effectually  as  I  might  do  if  personally  present. 

In  witness  whereof  I  have  hereunto  set  my  hand  this 

(Jay  of ,   in  the  year  one  thousand  nine   hundred  and 


Signed  in  presence  of  two  witnesses 


182 


and  Documents 


AUTHORITY    OF    REPRESENTATIVE    OF    OTHER 

CORPORATION    CONSENTING    TO    EXTENSION 

CORPORATE   EXISTENCE   OF   NATIONAL 

BANK 


,  190— 

At  a  meeting  of  the of  the of ,  held  on 

the day  of ,  1 90 — ,  it  was Voted,  That 

be,  and  he  is  hereby,  appointed  irrevocably  as  its  attorney, 
with  power  of  substitution,  to  consent  to  and  sign,  in  its  be- 
half, the  amendment  of  the article  of  the  Articles  of 

Association  of  The National Bank ,  said  amend- 
ment reading  as  follows  : 

"  This  Association  shall  continue  until  close  of  business  on 

unless  sooner  placed  in  voluntary  liquidation  by  the  act 

of  its  shareholders  owning  at  least  two-thirds  of  its  stock,  or 
otherwise  dissolved  by  authority  of  law." 

A  true  copy  from  the  records. 

Attest : 

___^ [affix  seal.] 


183 


Official  Forms 


CERTIFICATE  OF  AMENDMENT 
_NATIONAL BANK  _ 


,  190— 

To  THE  Comptroller  of  the  Currency, 

Washington,  D.  C. 

Sir  :  I  do  hereby  certify,  in  pursuance  of  the  provisions  of 
"  An  Act  to  enable  National  Banking  Associations  to  extend 
their  corporate  existence,  and  for  other  purposes,"  approved 
July  12,  1882,  that  the  amendment  of  the  Articles  of  Associa- 
tion, to  which  this  certificate  is  attached,  of  "  The ,"  and 

the  consent  thereto,  in  writing,  was  executed  in  duplicate 
by  shareholders  owning  not  less  than  two-thirds  of  the  stock 
of  said  bank  ;  and  I  do  further  certify  that  the  signatures  of 
the  shareholders  to  said  consent  and  amendment  of  the 
Articles  of  Association  are  the  true  and  correct  signatures  of 
said  shareholders  or  of  their  lawfully-appointed  attorneys;  and 
that  one  of  the  instruments  so  executed  is  the  foregoing,  and 
that  the  other,  in  all  respects  like  the  foregoing,  is  on  file  in 
said  Bank. 

I  further  certify  that  the  said  amendment  to  the  Articles 

of  Association  of  "The ,"  was  duly  recorded  upon  the 

minute-book  of  said   Association   on  the day  of , 

1 90 — ,  and  that  the  above  certificate  was  certified  under  the 
seal  of  the  Association  in  accordance  with  a  resolution  of  its 
Board  of  Directors,  duly  adopted  at  a  meeting  of  said  Direct- 
ors on  the day  of ,  190 — . 


President  or  Cashier. 
184 


and  Documents 


EXTENSION   OF  CHARTER 
TREASURY    DEPARTMENT 

Office  of  Comptroller  of  the  Currency. 

Washington, 1 90 — 

Whereas,  by  satisfactory  evidence  presented  to  the  under- 
signed  it  has   been    made    to    appear  that  The in  the 

of in  the  County  of and  State  of has 

complied  with  all  the  provisions  of  the  "  Act  of  Congress  to 
enable  National  Banking  Associations  to  extend  their  corpo- 
rate existence  and  for  other  purposes,"  approved  July  12th, 
1882. 

Now,  THEREFORE,  I, Comptroller  of  the  Currency,  do 

hereby  certify  that  The located  in  the of in 

the  County  of and  State  of is  authorized   to  have 

succession  for  the  period  specified  in  its  amended  articles  of 

association,  namely,  until  close  of  business  on . 

In  testimony  whereof,  witness  my  hand  and 
Seal  of  office  this day  of 1 90 — . 


Comptroller  of  the  Currency. 
No. 


185 


Official  Forms  and  Documents 


EXTENSION  OF   CHARTER 


ORDER  FOR  PLATES  AND  CIRCULATION 


Charter  No. 


-National- 


-Bank  of- 


To  THE  Comptroller  of  the  Currency. 

Sir  :  As  the  corporate  existence  of  this  bank  is  to  be 
legally  extended  for  twenty  years,  you  are  requested  to  have 
new  plates  engraved,  the  cost  to  be  paid  upon  demand,  and 
circulating  notes  printed  therefrom  as  follows: 


Cost  of 
plates. 


$75 

75 

50 


No.  of 
sheets  or- 
dered. 


Denominations  on  sheets. 


Jp<->9  <pO^   ^"^f    sP^ .  -  .  .  . 

$10,  $10,  $10,  $20. 
$50,  $100 


Total. 


Value 

per 
sheet. 


$20. 

50. 

150. 


Amount  of 
circula- 
tion. 


Respectfully, 


Cashier. 


186 


RE-EXTENSION    OF    CORPORATE 
EXISTENCE 

RE-EXTENSION  OF  CHARTER 
TREASURY    DEPARTMENT 

Office  of  Comptroller  of  the  Currency. 

Washington,  D.  C,  IpO — 

Whereas,  by  satisfactory  evidence  presented  to  the  under- 
signed, it  has  been  made  to  appear  that  The ,  located  in 

the of in  the  County  of and  State  of 

has  compHed  with  all  the  provisions  of  the  Act  of  Congress 
"  to  enable  National  Banking  Associations  to  extend  their 
corporate  existence,  and  for  other  purposes,"  approved  July 
12,  1882,  as  amended  by  the  Act,  approved  April  12,  1902  ; 

Now,  therefore,  I, Comptroller  of  the  Currency,  do 

hereby  certify  that  The located  in   the  of 

in    the   County    of and  State  of is  authorized   to 

have  succession    for  the    period    specified    in   its   amended 

articles     of    association,     namely,    until    close    of    business 

on . 

In  testimony  whereof  witness  my  hand  and 

Seal  of  office  this day  of 190 — . 


Comptroller  of  the  Currency. 

Charter  No. .  Extension  No. . 

187 


CHANGES    IN    CAPITAL    STOCK 


RESOLUTION   TO    INCREASE   CAPITAL  STOCK 

No.  


The 


National 


Bank  of 


(Date.) . 

At  a  meeting  of  the  shareholders  of  The National 

—  Bank  of ,  held  on ,  thirty  days'  notice  of  the 


proposed  business  having  been  given,  at  which share- 
holders were  present  in  person  and  by  proxy,  representing 
shares  of  the  stock  of  this  association,  it  was 

Resolved,  That,  under  the  provisions  of  the  act  of  May  1, 
1886,  the  capital  stock  of  this  association  be  inci-eased  in  the 
sum  of  $ ,  making  the  total  capital  $ . 

The  above  resolution  was  adopted  by  the  following  vote, 
representing  more  than  two-thirds  of  the  capital  stock  of  the 
association : 


Name  of  Shareholder. 


Residence. 


Name  of  proxy. 


No.  of  shares. 


Total  number  of  shares  voted  in  favor  of  the  resolution 
Total  number  of  shares  voted  against  the  resolution. . . 
Total  number  of  shares  represented  at  the  meeting 


188 


Official  Foj'ms  and  Documents 

I  hereby  certify  that  the  above  is  a  true  and  correct  re- 
port of  the  vote  and  of  the  resolution  adopted  at  a  meeting 
of  the  shareholders  of  this  bank  held  on . 


bank.        .  ' 

: :  President  or  Cashier. 

Subscribed  and  sworn  to  before  me  this day  of , 

A.D.  . 


Official  Seal 
of  Officer. 


Notary  Public. 


CERTIFICATE   OF  INCREASE  OF   CAPITAL   STOCK 


No. 


National Bank  of 


To  THE  Comptroller  of  the  Currency, 

JVashinglon,  D.  C: 

It  is  hereby  certified  that  the  capital  stock  of  "  The 

National Bank  of "  has  been   increased,  pursuant 

to   the   provisions  of  the  act  of  Congress  approved  May  1, 

1886,  in  the  sum  of dollars,  all  of  which  has  been  paid 

189 


Official  Forms 


in,   and   that  the   paid-up  capital   stock  of  said    bank    now 
amounts  to dollars. 


State  of    - 
County  of - 


President  or  Cashier, 


>  **: 


Subscribed  and  sworn  to  before  me,  this 


day  of  ■ 


A.D. 


Official  Seal 
of  Officer. 


Notary  Public. 


RESOLUTION   TO  REDUCE    CAPITAL  STOCK 


No. 


The 


National 


Bank  of 


(Date.) 


At  a  meeting  of  the  shareholders  of  The National 

—  Bank  of ,  held  on ,  thirty  days'  notice  of  the  pro- 


posed business  having  been  given,  at  which shareholders 

were  present  in  person   and  by   proxy,    representing  

shares  of  stock  of  this  association,  it  was 

Resolved,  That,    under    the  provisions    of   section   5143, 
U.  S.  Revised  Statutes,  and  of  the  law  amendatory  thereof, 

190 


and  Documents 


the  capital  stock  of  this  association  be  reduced  in  the  sum 
of   $ ,   leaving    the    total    capital    after    said    reduction 

$ . 

The  above  resolution  was  adopted  by   the  following  vote, 

representing  more  than  two-thirds  of  the  capital  stock  of  the 

association  ; 


Name  of  Shareholder. 


Residence. 


Name  of  proxy. 


No.  of  shares. 


Total  number  of  shares  voted  in  favor  of  the  resolution. 
Total  number  of  shares  voted  against  the  resolution  . . . 
Total  number  of  shares  represented  at  the  meeting 


I  hereby  certify  that  the  above  is  a  true  and  correct  re- 
port of  the  vote  and  of  the  resolution  adopted  at  a  meeting 
of  the  shareholders  of  this  bank,  held  on . 


Seal  of 
Bank. 


President  or  Cashier. 


Subscribed  and  sworn  to  before  me  this day  of 

A.D.  . 


Official  Seal 
of  Officer. 


Notary  Public. 


191 


Official  Forms  and  JDocumeiits 

CERTIFICATE    OF   REDUCTION   OF   CAPITAL 

STOCK 

The , 


To  THE  Comptroller  of  the  Currency, 

Washington,  D.  C: 

It   is  hereby  certified  that  the  capital  stock   of  The 

National   Bank   of has  been  reduced  by  a  vote   of  the 

shareholders  owning  two-thirds  of  the  stock  of  the   associa- ; 
tion,  in  accordance  with  the  provisions  of  section  5143  of  the 

Revised    Statutes  of  the  United  States,  in  the  sum  of 

dollars,  and  that  the  paid-up  capital  stock  of  said  bank  since 
said  reduction  is dollars. 


Bank 
Seal. 


President  or  Cashier. 


ss : 


State  of    

County  of 

I, ,  —  of  The National  Bank  of ,  in 

the  State  of ,  do  solemnly  swear  that  the  foregoing  cer- 
tificate, by  me  subscribed,  is  true. 


President  or  Cashier. 


Subscribed  and  sworn  to  before  me  this day  of 


Official  Seal 
of  Officer. 


Notary  Public. 

192 


CHANGE   OF  NAME,   ETC. 

CERTIFICATE    RELATIVE    TO    CHANGE    OF  TITLE 
OF  AN  ASSOCIATION 


The 


Bank  No. . 

National Bank  of 


(Date) 

At  a  meeting  of  the  shareholders  of  the  National 

Bank  of held  on ,  thirty  days'  notice  of  the 

proposed  business  having  been  given^  at  which  shareholders 
were  present,  in  person  and  by  proxy,  representing  — — 
shares  of  capital  stock,  it  was 

Resolved,  That,  under  the  provisions  of  the  Act  of  May  1, 

1886,  the    corporate     name    of  is     hereby    changed 

to . 


The  above  resolution  was  adopted  by  the  following  vote  : 

Name  of  Shareholder. 

Residence. 

Name  of  proxy. 

No.  of  shares. 

193 


Official  Forms  and  Documents 


AGAINST    RESOLUTION 


Name  of  Shareholder. 


Residence. 


Name  of  Proxy. 


No.  of  Shares. 


Total  number  of  shares  voted  in  favor  of  the  resolution 
Total  number  of  shares  voted  against  the  resolution 

Total  number  of  shares  represented  at  the  meeting 

Total  number  of  shares  of  capital  stock  of  bank 


I  hereby  certify  that  the  above  is  a  true  and  correct  re- 
port of  the  vote  and  of  the  resohition  adopted  at  a  meeting  of 
the  shareholders  of  this  bank  held  on . 


President  or  Cashier. 


194 


LIQUIDATION 

RESOLUTION    FOR   VOLUNTARY   LIQUIDATION 

No. 

The National Bank  of 

(Date.) . 

At  a  meeting  of  the   shareholders  of  The National 

Bank  of held  on thirty  days'  notice  of  the  pro- 
posed business  having  been  given,  at  which share- 
holders were  present  in  person  and  by  proxy,  representing 
shares  of  the  stock  of  this  association,  it  was 

Resolved,  That  "The National Bank ''  be 

placed  in  voluntary  liquidation,  under  the  provisions  of  sec- 
tions 5220  and  5221,  United  States  Revised  Statutes,  to  take 
effect . 

The  above  resolution  was  adopted  by  the  following  vote, 
representing  two-thirds  of  the  cajntal  stock  of  the  association: 


Name  of  Shareholder. 


Residence. 


Name  of  proxy. 


No.  of  shares. 


Total  number  of  shares  voted  in  favor  of  the  rcsohition. 
Total  number  of  shares  voted  against  the  resolution  . . 
Total  number  of  shares  represented  at  the  meeting  . . 


195 


Official  Foiiiis 


I  hereby  certify  that  the  above  is  a  true  and  correct  re- 
port of  the  vote  and  of  the  resolution  adopted  at  a  meeting 
of  the  shareholders  of  this  bank  held  on . 


Seal  of 
Bank. 


President  or  Cashier. 


Subscribed  and  sworn  to  before  me  this day  of 

A.D.   . 


Official  Seal  • 
of  Officer.     • 


Notary  Public. 


CERTIFICATE  FOR   VOLUNTARY   LIQUIDATION 

No. . 


National Bank 


To  THE  Comptroller  of  the  Currency, 

Washington,  D.  C: 

Sir  :  It  is  hereby  certified,  in  pursuance  of  sections  5220 
and  5221  of  the  Revised  Statutes  of  the  United  States,  that 

at  a  meeting  of  the  stockholders  of  the ,  located  at , 

in  the  State  of ,  duly  notified  and  held  pursuant  to  law 

and  the  articles  of  association  of  said  bank  at  the  office  of  said 
association   at ,   aforesaid,  on   the day   of ,  it 

196 


and  Documents 


was  voted  by  the  stockholders  of  said  association  owning 
two-thirds  of  its  stock  that  said  association  go  into  liquida- 
tion and  be  closed. 

In  testimony  whereof  I  have,  by  instruction  of  the  board 
of  directors  of  said  association,  hereto  subscribed  my  name 

and  affixed  the  seal  of  said  association  at ,  aforesaid,  the 

day  and  year  above  written. 


Seal  of 
Bank. 


President  or  Cashier. 


The 


National 


NOTICE 

-  Bank 


-,  located  at 


in 


the  State  of ,  is  closing  up  its  affairs.     All  note  holders 

and  others,  creditors  of  said  association,  are  therefore  hereby 
notified  to  present  their  notes  and  other  claims  against  the 
association  for  payment. 


President  or  Cashier. 


Dated. 


197 


Official  Forms  and  Documents 


OATH    OF    PUBLICATION 


State  of 


ss. 


County  of 


Cut  the  printed  notice  from  the  news- 
paper and  attach  here. 


Forward  notice  to  Comptroller  of  Cur- 
rency as  promptly  as  possible. 


being  duly  sworn,  deposes 
and  says  that  he  is  the  pub- 
lisher of a news- 
paper pubUshed  in  the 

of  ,  County    of  , 

State  of  — 


— ,  and  that  the 
annexed  advertisement  of 
the  Certificate  for  Voluntary 

Liquidation     of    the     

National   Bank  of has 

appeared  in  each  issue  of 
said  paper  for  a  period  of 
at  least  sixty  days,  begin- 
ning the day  of , 


and  ending  the day  of 

,  190—. 


Subscribed  and  sworn  to  before  me,  a 

State  and  County  aforesaid,  this day  of 


in  and  for  the 
,  190—. 


Seal  of 
Officer. 


198 


INDEX 


Page 

Application  to  the  Comptroller 1 

Articles  of  Association 3 

Bonds.  * 

Additional  Deposit  on  Market  Decline 27 

Annual  Examination  of 45 

Assignment  of 28 

Issues  Outstanding 28 

Bonds,  Charter. 

Amount  of  Deposit  Required 9 

Depo.sit  of 8 

Interest  on,  Payable  to  Owner 26 

Kind  of.  Necessary 26 

Receipt  for 27 

Substitution 27 

By-Laws 6 

Capit.\l  Stock. 

Certificate  of  Payment 7 

Certificates  for 5 

Enforcing  Payment  of 14 

Increase  of 96 

Necessary  for  Organization 3 

199 


Index 

Capital  Stock— Continued.  Page 

Of  State  Bank  Converting 17 

Of  State  Bank  Converting,  par  value 18 

Reduction  of 98 

Subscriptions  to 7 

Charter. 

Form  of 10 

Number 11 

Publication  of » .     . 10 

Publication  of.  Oath 10 

Circulation. 

Bonds,  Deposit  of 24 

Charges  for  Transporting 37 

Destruction  of  Worn  and  Mutilated 36 

Form  for  Ordering 29 

Method  of  Calculating  Amount  Outstanding  ....  40 

Method  of  Ordering 30 

Payment  of  Tax  on 42 

Profits  on 46 

Qualities  of 24 

Redemption  of 35 

Reduction  of 44 

Report  on 39 

Signatures  on 32 

Tax  on 39 

Tax  on,  Issued  by  Other  than  National  Banks    ...  43 

Tax  on.  Protest  Against  Excessive 43 

When  Exempt  from  Tax 43 

200 


Index 

Conversion.  Page 

Private  Banks    .     .     .y, 19 

State  Banks  ....*• 16 

Corporate  Existence. 

Extension  of 88 

Re-extension  of 91 

Correspondent 116 

Consolidation 21 

Dividends. 

Declaration  of,  for  Increasing  Capital 97 

Payment  of,  when  Prohibited (i  1,114 

Report  of 815 

Directors. 

Oath  of,  Individual 5 

Oath  of,  Joint 5 

Qualifications  of 1- 

Selection  of ''^ 

Voting  for  by  Proxy 1'' 

Documents  and  Forms I'^'* 

Five-Per-Cent.  Fund «5- 

Rcduction  of •'^6 

Remittances  for '5'} 

Forms  and  Documents l-'^>'5 

Gold  Banks 2.> 

201 


Index 

Government  Depositaries.  Page 

History  of 62 

History  and  Use  of  Temporary 69 

Kinds  of 64 

Regulations  Governing  Permanent 66 

Special 71 

Withdrawal  of  Funds  From 73 

Government  Deposits. 

Profits  on 74 

Reserve  Against 73 

Lawful  Money. 

Deposit  of  by  Bank  Liquidating  for  Consolidation  not 

Necessary 106 

Deposit  of,  on  Liquidation 104 

Liquidation 103 

Location  or  Name. 

Change  of 100 

Officers. 

Election  of 6 

Signatures  of 6 

Signatures  of,  on  Circulation 32 

Official  Reports 81 

Penalty  for  Failure  to  Report .84 

Organization  Certificate 4 

Plates. 

Cost  of  Engraving 29 

202 


Index 

Redemption.  Pase 

Pro  Rata  Assessment  for  Payment  of -58 

Reserve. 

Agents 58 

Definition  of 52 

Legal .52 

Maintenance  of • 61 

Maintenance  of,  Against  Government  Deposits  ...  73 

Method  of  Calculating 54 

Reserve  Banks. 

Central  Reserve 57 

Country 57 

Reserve ^' 

Reserve  Cities. 

Central  Reserve 59 

Reserve ^^ 

Undesignated 

Restrictions '"' 

o 

Seal  of  Bank 

Shareholders'  Meeting. 

Notice  of ^^ 

Surplus  Fund. 

07 

Requirements  of 


203 


UNIVERSITY  OF  CALIFORNIA  AT  '  OS  ANGELES 

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UNIVEUSl'iY  OF  CALIFORNIA 

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